# Official Journal C 368/2011

| | ISSN 1977-091X
  doi:10.3000/1977091X.C_2011.368.eng |
| --- | --- |
| Official Journal
  of the European Union | C 368 |
| | |
| English edition | Information and Notices | Volume 5416 December 2011 |

ISSN 1977-091X

doi:10.3000/1977091X.C_2011.368.eng

Official Journal

of the European Union

C 368

English edition

Information and Notices

Volume 5416 December 2011

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| Notice No | Contents | page |
| --- | --- | --- |
| | IV   Notices |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | Court of Auditors |
| 2011/C 368/01 | Report on the annual accounts of the Artemis Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 1 |
| 2011/C 368/02 | Report on the annual accounts of the Clean Sky Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 8 |
| 2011/C 368/03 | Report on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 17 |
| 2011/C 368/04 | Report on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year 2010, together with the replies of the Joint Undertaking | 24 |
| 2011/C 368/05 | Report on the annual accounts of the SESAR Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 32 |
| 2011/C 368/06 | Report on the annual accounts of the Fuel Cells and Hydrogen Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 40 |
| 2011/C 368/07 | Report on the annual accounts of the ENIAC Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking | 48 |

Notice No

Contents

page

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

2011/C 368/01

Report on the annual accounts of the Artemis Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

1

2011/C 368/02

Report on the annual accounts of the Clean Sky Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

8

2011/C 368/03

Report on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

17

2011/C 368/04

Report on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year 2010, together with the replies of the Joint Undertaking

24

2011/C 368/05

Report on the annual accounts of the SESAR Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

32

2011/C 368/06

Report on the annual accounts of the Fuel Cells and Hydrogen Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

40

2011/C 368/07

Report on the annual accounts of the ENIAC Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

48

| EN | |
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EN

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IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

| 16.12.2011 | EN | Official Journal of the European Union | C 368/1 |
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16.12.2011

EN

Official Journal of the European Union

C 368/1

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REPORT

on the annual accounts of the Artemis Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/01

INTRODUCTION

| 1. | The Artemis Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
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1.

The Artemis Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2). |
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2.

The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2).

| 3. | The Founding Members of the Artemis Joint Undertaking are the European Union, represented by the Commission, the Member States Austria, Belgium, Denmark, Estonia, France, Finland, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Portugal, Romania, Slovenia, Spain, Sweden and the United Kingdom, and Artemisia, an association representing companies and other research organisations active in the field of Embedded Computing Systems in Europe. In 2009, Cyprus, the Czech Republic, Latvia and Norway also became members of the Joint Undertaking. |
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3.

The Founding Members of the Artemis Joint Undertaking are the European Union, represented by the Commission, the Member States Austria, Belgium, Denmark, Estonia, France, Finland, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Portugal, Romania, Slovenia, Spain, Sweden and the United Kingdom, and Artemisia, an association representing companies and other research organisations active in the field of Embedded Computing Systems in Europe. In 2009, Cyprus, the Czech Republic, Latvia and Norway also became members of the Joint Undertaking.

| 4. | The maximum EU contribution to the Artemis Joint Undertaking to cover running costs and research activities is 420 million euro to be paid from the budget of the Seventh Research Framework Programme (3). The Artemisia association is to make a maximum contribution of 30 million euro to the running costs. Artemis Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects. |
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4.

The maximum EU contribution to the Artemis Joint Undertaking to cover running costs and research activities is 420 million euro to be paid from the budget of the Seventh Research Framework Programme (3). The Artemisia association is to make a maximum contribution of 30 million euro to the running costs. Artemis Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects.

| 5. | The Joint Undertaking started to work autonomously on 26 October 2009. |
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5.

The Joint Undertaking started to work autonomously on 26 October 2009.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (4) of the Artemis Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts. |
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6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (4) of the Artemis Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7). |
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7.

This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7).

The Director’s responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular. |
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8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular.

The Court’s responsibility

| 9. | The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
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9.

The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
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10.

The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
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11.

The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
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12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 13. | In the Court’s opinion, the Annual Accounts of the Artemis Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules. |
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13.

In the Court’s opinion, the Annual Accounts of the Artemis Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

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

| 14. | In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
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14.

In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 15. | The comments which follow in paragraphs 16 to 26 do not call the Court’s opinions into question. |
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15.

The comments which follow in paragraphs 16 to 26 do not call the Court’s opinions into question.

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | Contrary to Articles 29 to 31 of the financial rules of the Joint Undertaking, the 2010 budget was not adopted by the end of the previous year (adopted on 28 January 2010). Its structure and presentation were not in line with the provisions of the financial rules. |
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16.

Contrary to Articles 29 to 31 of the financial rules of the Joint Undertaking, the 2010 budget was not adopted by the end of the previous year (adopted on 28 January 2010). Its structure and presentation were not in line with the provisions of the financial rules.

| 17. | The final budget included payment appropriations of 27 million euro. The utilisation rate was 37,7 %. Deposits in bank accounts at the end of the year totalled 16,6 million euro (60 % of the available payment appropriations in 2010). According to the Joint Undertaking, the relatively low implementation rate for payment appropriations reflects the delays at Member State level in signing the national grant agreements (12). |
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17.

The final budget included payment appropriations of 27 million euro. The utilisation rate was 37,7 %. Deposits in bank accounts at the end of the year totalled 16,6 million euro (60 % of the available payment appropriations in 2010). According to the Joint Undertaking, the relatively low implementation rate for payment appropriations reflects the delays at Member State level in signing the national grant agreements (12).

Internal control systems

| 18. | The Joint Undertaking has not fully implemented its internal controls and financial information systems during 2010. In particular, further work is needed on the operational verification of cost claims, on the assurance provided by the national authorities’ certificates and the ex post audit strategy. These are important elements of the Joint Undertaking’s system of internal control. |
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18.

The Joint Undertaking has not fully implemented its internal controls and financial information systems during 2010. In particular, further work is needed on the operational verification of cost claims, on the assurance provided by the national authorities’ certificates and the ex post audit strategy. These are important elements of the Joint Undertaking’s system of internal control.

| 19. | In the area of ex ante verification, reliance is placed entirely upon the certificates provided by the national authorities and no other checks were performed to ensure the legality and regularity of the expenses declared by the beneficiaries. |
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19.

In the area of ex ante verification, reliance is placed entirely upon the certificates provided by the national authorities and no other checks were performed to ensure the legality and regularity of the expenses declared by the beneficiaries.

| 20. | The ex post audit of cost claims related to the projects has been fully delegated to the Member States, without any control being exercised by the Joint Undertaking (13). This will make it difficult for the Joint Undertaking to ensure: (i) that the financial interests of its Members are adequately protected, as required by its Council Regulation (14); and (ii) the legality and regularity of the underlying transactions. |
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20.

The ex post audit of cost claims related to the projects has been fully delegated to the Member States, without any control being exercised by the Joint Undertaking (13). This will make it difficult for the Joint Undertaking to ensure: (i) that the financial interests of its Members are adequately protected, as required by its Council Regulation (14); and (ii) the legality and regularity of the underlying transactions.

| 21. | The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however is lagging behind in some areas (15). |
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21.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however is lagging behind in some areas (15).

| 22. | The Accounting Officer of the Joint Undertaking has validated the financial and accounting systems (ABAC and SAP), but has not yet validated the underlying business processes which provide financial information, in particular the one providing financial information about the validation and payment of the cost claims received from the national authorities. |
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22.

The Accounting Officer of the Joint Undertaking has validated the financial and accounting systems (ABAC and SAP), but has not yet validated the underlying business processes which provide financial information, in particular the one providing financial information about the validation and payment of the cost claims received from the national authorities.

| 23. | Contrary to Article 103 of its financial rules, the Joint Undertaking has not yet implemented an internal procedure to deduct the interest generated by the prefinancings from the payment of the balance of amounts due to the beneficiaries. |
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23.

Contrary to Article 103 of its financial rules, the Joint Undertaking has not yet implemented an internal procedure to deduct the interest generated by the prefinancings from the payment of the balance of amounts due to the beneficiaries.

OTHER MATTERS

Internal audit function and the Commission’s Internal Audit Service

| 24. | Article 6.2 of the Council Regulation setting up Artemis stipulates that the Joint Undertaking shall have its own internal audit capability. However, at the end of 2010, this important element of the internal control system had not yet been set up. |
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24.

Article 6.2 of the Council Regulation setting up Artemis stipulates that the Joint Undertaking shall have its own internal audit capability. However, at the end of 2010, this important element of the internal control system had not yet been set up.

| 25. | In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor. Although, the financial rules of the Joint Undertaking have not yet been amended to include the provision referring to the powers of the Commission’s internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined. |
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25.

In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor. Although, the financial rules of the Joint Undertaking have not yet been amended to include the provision referring to the powers of the Commission’s internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined.

Lack of host agreement

| 26. | As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed. |
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26.

As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Council Regulation (EC) No 74/2008 of 20 December 2007 on the establishment of the ‘Artemis Joint Undertaking’ to implement a Joint Technology initiative on Embedded Computing Systems (OJ L 30, 4.2.2008, p. 52).

1

(2)  The Annex summarises the Joint Undertaking’s competences, activities and available resources. It is presented for information purposes.

2

Annex

(3)  The Seventh Framework Programme, adopted by Decision No 1982/2006/EC of the European Parliament and of the Council, brings all the research-related EU initiatives together under one roof and plays a crucial role in achieving the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.

3

(4)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives inter alia an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

4

(5)  The financial statements include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and the annex to the financial statements, which includes a description of the main accounting policies and other explanatory information.

5

(6)  The budget implementation reports comprise the budget outturn account and its annex.

6

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

7

(8)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

8

(9)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

9

(10)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are integrated as such in the financial rules of the Joint Undertaking.

10

(11)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

11

(12)  The Joint Undertaking makes prefinancing payments for projects only once the national grant agreements have been signed by the national authorities. At the end of year, there were still national grant agreements for the 2008 and 2009 calls that had not been signed.

12

(13)  The administrative agreements signed with the National Funding Authorities (NFAs) do not explicitly detail the practical arrangements for the ex post audits (i.e. audit methodology, procedures to be applied) to be performed by the NFAs. The NFAs are legally bound only to communicate the results of these audits to the Joint Undertaking.

13

ex post

(14)  Article 12 of the Council Regulation setting up the Joint Undertaking states that the Joint Undertaking ‘shall ensure that the financial interests of its members are adequately protected by carrying out or commissioning appropriate internal and external controls’ and that it ‘shall carry out on-the-spot checks and financial audits among the recipients of the Artemis Joint Undertaking's public funding. These checks and audits shall be performed either directly by the Artemis Joint Undertaking or by Artemis Member States on its behalf’.

14

(15)  (a) incomplete strategic IT planning and monitoring cycle; (b) lack of complete formal security policies and rules; (c) incomplete IT Risk management; and (d) lack of formal Business Continuity Plan (BCP) and complete and tested Disaster Recovery Plan (DRP).

15

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ANNEX

Artemis Joint Undertaking (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Extracts from Article 187 of the Treaty on the Functioning of the European Union) | The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes. |
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| Competences of the Joint Undertaking


  (Council Regulation (EC) No 74/2008) | Objectives

  The Artemis Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and the theme ‘information and communication technologies’ of the specific programme ‘cooperation’.

  Tasks







  — | define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems; |

Areas of Union competence deriving from the Treaty

(Extracts from Article 187 of the Treaty on the Functioning of the European Union)

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

Competences of the Joint Undertaking

(Council Regulation (EC) No 74/2008)

Objectives

The Artemis Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and the theme ‘information and communication technologies’ of the specific programme ‘cooperation’.

Tasks

—

define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems;

| — | support the implementation of the R & D Activities by awarding funding to participants in selected projects following competitive calls for proposals; |
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—

support the implementation of the R & D Activities by awarding funding to participants in selected projects following competitive calls for proposals;

| — | promote a public-private partnership aimed at mobilising and pooling Union, national and private efforts and increasing overall R & D investments in the field of Embedded Computing Systems; |
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—

promote a public-private partnership aimed at mobilising and pooling Union, national and private efforts and increasing overall R & D investments in the field of Embedded Computing Systems;

| — | achieve synergy and coordination of European R & D efforts in the field of Embedded Computing Systems; |
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—

achieve synergy and coordination of European R & D efforts in the field of Embedded Computing Systems;

| — | promote the involvement of SMEs. |
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—

promote the involvement of SMEs.

Governance

1 —   The Governing Board (GB)

has overall responsibility for the operations of the Joint Undertaking and oversees the implementation of its activities.

2 —   The Director

is the chief executive responsible for the day-to-day management of the Joint Undertaking in accordance with the decisions of the Governing Board.

3 —   The Public Authorities Board

is responsible for the decisions on the scope and budget of the calls for proposals, selection of proposals and allocation of public funds for selected proposals.

4 —   The Industry and Research Committee

elaborates the multiannual strategic plan as well as the research agenda and the annual work programme.

5 —   External audit

Court of Auditors.

6 —   Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources available to the Joint Undertaking in 2010

Budget

the budget contains commitment appropriations for 38,5 million euro and payment appropriations for 27 million euro

Staff at 31 December 2010

8 posts provided for in the establishment plan, of which 7 posts were occupied

Other staff:

| — | Seconded National Experts: 0 |
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—

Seconded National Experts: 0

| — | Contract staff: 4 |
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—

Contract staff: 4

| — | Local staff: 0 |
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—

Local staff: 0

Total staff employed: 11

Allocated to:

| — | Operational activities: 5 |
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—

Operational activities: 5

| — | Administrative tasks: 4 |
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—

Administrative tasks: 4

| — | Mixed tasks: 2 |
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—

Mixed tasks: 2

Activities and services provided in 2010

A Call for Proposals was organised in 2010 with an overall budget of 93 million euro.

Source: Information supplied by the Joint Undertaking.

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REPLIES OF THE ARTEMIS JOINT UNDERTAKING

Paragraph 16

Because the operational part of the budget depends on the commitment of the Member States, and for most of them that is only possible after adoption of their national budget, the budget was adopted by the Governing Board in its meeting of January 2011.

The structure and presentation of the budget have been adapted in the 2011 budget, according to the remarks and recommendations made previously by the Court of Auditors.

Paragraph 17

We agree with the Court of Auditors' comments. Artemis is making efforts to speed-up the process.

Paragraph 20

Ex post audits are primarily delegated to Artemis Member States. Exceptions are foreseen in the adopted ex post audit strategy. Artemis is currently collecting the various national strategies from Member States and their ex post audit results. Then we'll analyse with the IAS (Artemis internal auditor) the way to improve and review our strategy.

Paragraph 21

The formalisation of policies and procedures is ongoing and indeed not yet completed due to the interim situation in the provisional premises of Artemis JU during 2010.

Paragraph 22

For the other underlying business processes Artemis relies on the information provided with by the National Authorities and is taking actions to improve the system (see 20).

Paragraph 23

Artemis has in ABAC, as IT tool to manage invoices and payments, a procedure to deduct the interest on prefinancings as foreseen and documented in ABAC by the European Commission. However until now the National Authorities have not declared any interest on prefinancings. Artemis will ask the National Authorities about their rules concerning the obligation for the beneficiaries to declare interest generated by the prefinancing.

Paragraph 24

This point is being addressed with the Commission's Internal Audit Service.

Paragraph 25

The Charter of the Commission's Internal Audit Service was adopted by the Governing Board on 25 November 2010. The financial rules of Artemis will be amended accordingly at the appropriate occasion.

Paragraph 26

Artemis Joint Undertaking continues to cooperate for the implementation of the provisions of a Host State agreement and awaits the outcome of the next steps of the procedure to have an agreement signed.

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| 16.12.2011 | EN | Official Journal of the European Union | C 368/8 |
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16.12.2011

EN

Official Journal of the European Union

C 368/8

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REPORT

on the annual accounts of the Clean Sky Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/02

INTRODUCTION

| 1. | The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
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1.

The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air-transport technologies in the EU for earliest possible deployment (2). The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘Integrated Technology Demonstrators’ (ITDs). |
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2.

The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air-transport technologies in the EU for earliest possible deployment (2). The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘Integrated Technology Demonstrators’ (ITDs).

| 3. | The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs. |
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3.

The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs.

| 4. | The maximum EU contribution to the Clean Sky Joint Undertaking to cover running costs and research activities is 800 million euro to be paid from the budget of the Seventh Research Framework Programme (3). Other Members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions. |
| --- | --- |

4.

The maximum EU contribution to the Clean Sky Joint Undertaking to cover running costs and research activities is 800 million euro to be paid from the budget of the Seventh Research Framework Programme (3). Other Members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions.

| 5. | The Joint Undertaking started working autonomously on 16 November 2009. |
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5.

The Joint Undertaking started working autonomously on 16 November 2009.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (4) of the Clean Sky Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (4) of the Clean Sky Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7). |
| --- | --- |

7.

This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7).

The Director’s responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules, under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular. |
| --- | --- |

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules, under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular.

The Court’s responsibility

| 9. | The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
| --- | --- |

9.

The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
| --- | --- |

10.

The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
| --- | --- |

11.

The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
| --- | --- |

12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 13. | In the Court’s opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules. |
| --- | --- |

13.

In the Court’s opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

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

| 14. | In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
| --- | --- |

14.

In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 15. | The comments which follow in paragraphs 16-25 do not call the Court’s opinions into question. |
| --- | --- |

15.

The comments which follow in paragraphs 16-25 do not call the Court’s opinions into question.

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | The structure and presentation of the 2010 budget were not in line with the requirements of the Council Regulation setting up the Joint Undertaking nor with its financial rules (12). |
| --- | --- |

16.

The structure and presentation of the 2010 budget were not in line with the requirements of the Council Regulation setting up the Joint Undertaking nor with its financial rules (12).

| 17. | The final budget included commitment appropriations of 168 million euro and payment appropriations of 129 million euro. While the utilisation rate for commitment appropriations was 96 %, the rate for payment appropriations was only 58 %. This reflects the significant delays in the implementation of the activities as compared with the initial plan (13). The low implementation of the budget is also reflected in the cash balance, which stood at 53 million euro at the end of the year (41 % of the available payment appropriations in 2010). |
| --- | --- |

17.

The final budget included commitment appropriations of 168 million euro and payment appropriations of 129 million euro. While the utilisation rate for commitment appropriations was 96 %, the rate for payment appropriations was only 58 %. This reflects the significant delays in the implementation of the activities as compared with the initial plan (13). The low implementation of the budget is also reflected in the cash balance, which stood at 53 million euro at the end of the year (41 % of the available payment appropriations in 2010).

Internal control systems

| 18. | The Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010. In particular, further work is needed on the ex-ante control procedures applied for the validation of cost claims. These are important elements of the Joint Undertaking’s system of internal control. |
| --- | --- |

18.

The Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010. In particular, further work is needed on the ex-ante control procedures applied for the validation of cost claims. These are important elements of the Joint Undertaking’s system of internal control.

| 19. | The Court noted that in those cases where a Member or an associate did not submit the required audit certificate (14), the Joint Undertaking correctly did not accept the cost claims. However, in four cases the Joint Undertaking, when validating the cost claims, did not take into account exceptions included in the audit certificates. |
| --- | --- |

19.

The Court noted that in those cases where a Member or an associate did not submit the required audit certificate (14), the Joint Undertaking correctly did not accept the cost claims. However, in four cases the Joint Undertaking, when validating the cost claims, did not take into account exceptions included in the audit certificates.

| 20. | The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (15). |
| --- | --- |

20.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (15).

| 21. | The Accounting Officer of the Clean Sky Joint Undertaking validated the financial and accounting systems (ABAC and SAP). However, the underlying business processes which provide financial information were not validated, in particular the system providing financial information about the validation of the cost claims. |
| --- | --- |

21.

The Accounting Officer of the Clean Sky Joint Undertaking validated the financial and accounting systems (ABAC and SAP). However, the underlying business processes which provide financial information were not validated, in particular the system providing financial information about the validation of the cost claims.

| 22. | In October 2010, the Joint Undertaking adopted a comprehensive strategic internal audit plan for the period 2010-2012. It is noted, however, that some of the key processes, such as the ex-ante validation of the cost claims, are scheduled to be examined in 2011 and that the ex-post audits, a key control which aims to assess the legality and regularity of the underlying transactions, are not planned to start until 2011. |
| --- | --- |

22.

In October 2010, the Joint Undertaking adopted a comprehensive strategic internal audit plan for the period 2010-2012. It is noted, however, that some of the key processes, such as the ex-ante validation of the cost claims, are scheduled to be examined in 2011 and that the ex-post audits, a key control which aims to assess the legality and regularity of the underlying transactions, are not planned to start until 2011.

OTHER MATTERS

Protection of Intellectual Property

| 23. | As at the end of 2010, the Joint Undertaking had not yet completed the internal procedures to supervise the application of the provisions included in the consortium and grant agreements regarding the protection, use and dissemination of research results. |
| --- | --- |

23.

As at the end of 2010, the Joint Undertaking had not yet completed the internal procedures to supervise the application of the provisions included in the consortium and grant agreements regarding the protection, use and dissemination of research results.

Internal audit function and the Commission’s Internal Audit Service

| 24. | In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor. Although the Joint Undertaking’s financial rules have not yet been amended to include the provision referring to the powers of the Commission’s internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined. |
| --- | --- |

24.

In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor. Although the Joint Undertaking’s financial rules have not yet been amended to include the provision referring to the powers of the Commission’s internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined.

Lack of host State agreement

| 25. | As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed. |
| --- | --- |

25.

As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking (OJ L 30, 4.2.2008, p. 1).

1

(2)  The Annex summarises the Joint Undertaking’s competences, activities and available resources. It is presented for information purposes.

2

Annex

(3)  The Seventh Framework Programme, adopted by Decision No 1982/2006/EC of the European Parliament and of the Council, brings all the research-related EU initiatives together under one roof and plays a crucial role in achieving the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.

3

(4)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives inter alia an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

4

(5)  The financial statements include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and the annex to the financial statements, which includes a description of the main accounting policies and other explanatory information.

5

(6)  The budget implementation reports comprise the budget outturn account and its annex.

6

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

7

(8)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

8

(9)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

9

(10)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are integrated as such in the financial rules of the Joint Undertaking.

10

(11)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

11

(12)  The budget was not presented as a single document but as part of the annual implementation plan and did not include all the required elements (for instance, the staff establishment plan).

12

(13)  The 2008 and 2009 planned activities were not fully implemented at the end of 2009 and this led to recoveries amounting to 4,9 million euro during 2010. At the end of 2010, the Joint Undertaking had not received the cost claims for its 2010 activities. These are due to be sent by beneficiaries after 1 March 2011.

13

(14)  Cost claims have to be accompanied by an independent report, issued by a certified auditor, under the terms of reference of the grant agreements.

14

(15)  (a) incomplete strategic IT planning and monitoring cycle, (b) lack of formal security policies and rules, (c) incomplete IT Risk management and (d) lack of formal Business Continuity Plan (BCP) and complete and tested Disaster Recovery Plan (DRP).

15

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ANNEX

Clean Sky Joint Undertaking (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Extracts from Articles 171 and 172 of the Treaty on the Functioning of the European Union) | Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme provides for a Community contribution to the establishment of long-term public-private partnerships in the form of Joint Technology Initiatives which could be implemented through Joint Undertakings within the meaning of Article 171 of the Treaty.
  Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking (OJ L 30, 4.2.2008, p. 1). |
| --- | --- |
| Competences of the Joint Undertaking


  (Council Regulation (EC) No 71/2008) | Objectives







  — | The Clean Sky Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular Theme 7, Transport (including Aeronautics) of the Specific Programme Cooperation, |

Areas of Union competence deriving from the Treaty

(Extracts from Articles 171 and 172 of the Treaty on the Functioning of the European Union)

Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme provides for a Community contribution to the establishment of long-term public-private partnerships in the form of Joint Technology Initiatives which could be implemented through Joint Undertakings within the meaning of Article 171 of the Treaty.

Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking (OJ L 30, 4.2.2008, p. 1).

Competences of the Joint Undertaking

(Council Regulation (EC) No 71/2008)

Objectives

—

The Clean Sky Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular Theme 7, Transport (including Aeronautics) of the Specific Programme Cooperation,

| — | accelerating in the EU the development, validation and demonstration of clean Air Transport technologies for earliest possible deployment, |
| --- | --- |

—

accelerating in the EU the development, validation and demonstration of clean Air Transport technologies for earliest possible deployment,

| — | ensuring coherent implementation of European research efforts aiming at environmental improvements in the field of Air Transport, |
| --- | --- |

—

ensuring coherent implementation of European research efforts aiming at environmental improvements in the field of Air Transport,

| — | creating a radically innovative Air Transport System based on the integration of advanced technologies and full scale demonstrators, with the target of reducing the environmental impact of air transport through significant reduction of noise and gaseous emissions, and improvement of the fuel economy of aircrafts, |
| --- | --- |

—

creating a radically innovative Air Transport System based on the integration of advanced technologies and full scale demonstrators, with the target of reducing the environmental impact of air transport through significant reduction of noise and gaseous emissions, and improvement of the fuel economy of aircrafts,

| — | accelerating the generation of new knowledge, innovation and the uptake of research proving the relevant technologies and fully integrated system of systems, in the appropriate operational environment, leading to strengthened industrial competitiveness. |
| --- | --- |

—

accelerating the generation of new knowledge, innovation and the uptake of research proving the relevant technologies and fully integrated system of systems, in the appropriate operational environment, leading to strengthened industrial competitiveness.

Tasks

| — | Bringing together a range of ITDs with the emphasis on innovative technologies and development of full scale demonstrators, |
| --- | --- |

—

Bringing together a range of ITDs with the emphasis on innovative technologies and development of full scale demonstrators,

| — | focusing efforts within ITDs on key deliverables that can help meet Europe's environmental and competitiveness goals, |
| --- | --- |

—

focusing efforts within ITDs on key deliverables that can help meet Europe's environmental and competitiveness goals,

| — | enhancing the technology verification process in order to identify and remove obstacles to future market penetration, |
| --- | --- |

—

enhancing the technology verification process in order to identify and remove obstacles to future market penetration,

| — | pooling user requirements to guide investment in research and development towards operational and marketable solutions, |
| --- | --- |

—

pooling user requirements to guide investment in research and development towards operational and marketable solutions,

| — | implementing the research and development activities needed, where appropriate by awarding grants following calls for proposals, |
| --- | --- |

—

implementing the research and development activities needed, where appropriate by awarding grants following calls for proposals,

| — | awarding grants to support research performed by its Members and by other entities selected following calls for proposals in accordance with open criteria agreed by the Governing Board, |
| --- | --- |

—

awarding grants to support research performed by its Members and by other entities selected following calls for proposals in accordance with open criteria agreed by the Governing Board,

| — | publishing information on the projects, including the name of the recipients and the amount of the financial contribution of the Clean Sky Joint Undertaking per recipient, |
| --- | --- |

—

publishing information on the projects, including the name of the recipients and the amount of the financial contribution of the Clean Sky Joint Undertaking per recipient,

| — | ensuring the provision of services and supply contracts, where appropriate, through calls for tender, |
| --- | --- |

—

ensuring the provision of services and supply contracts, where appropriate, through calls for tender,

| — | mobilising the public and private sector funds needed, |
| --- | --- |

—

mobilising the public and private sector funds needed,

| — | liaising with national and international activities in the Joint Undertaking technical domain, in particular with the SESAR Joint Undertaking, |
| --- | --- |

—

liaising with national and international activities in the Joint Undertaking technical domain, in particular with the SESAR Joint Undertaking,

| — | informing, by way of periodic meetings, the National States Representative Group and involving ACARE, |
| --- | --- |

—

informing, by way of periodic meetings, the National States Representative Group and involving ACARE,

| — | notifying legal entities that have concluded a grant agreement with the Clean Sky Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme. |
| --- | --- |

—

notifying legal entities that have concluded a grant agreement with the Clean Sky Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme.

Governance

1 —   The Governing Board

The Governing Board is the governing body of the Clean Sky Joint Undertaking.

2 —   The Director

The Executive Director shall be responsible for the day-to-day management of the Clean Sky Joint Undertaking and is its legal representative. He shall be accountable to the Governing Board.

3 —   The ITD Steering Committees

ITD Steering Committees shall be established by the Governing Board for each of the six ITDs. The following ITDs shall be established:

| — | Smart Fixed Wing |
| --- | --- |

—

Smart Fixed Wing

| — | Green Regional Aircraft |
| --- | --- |

—

Green Regional Aircraft

| — | Green Rotorcraft |
| --- | --- |

—

Green Rotorcraft

| — | Systems for Green operations |
| --- | --- |

—

Systems for Green operations

| — | Green and Sustainable Engine |
| --- | --- |

—

Green and Sustainable Engine

| — | Eco-Design |
| --- | --- |

—

Eco-Design

An independent Technology Evaluator shall be established for the entire duration of Clean Sky.

4 —   National States Representative Group

The National States Representative Group shall consist of one representative of each Member State and of each other country associated with the Framework Programme. It shall elect a chairman from among its members.

5 —   The General Forum

The General Forum is a consultative body to the Clean Sky Joint Undertaking. The General Forum shall be composed of one representative from:

| — | each Member of the Clean Sky Joint Undertaking, |
| --- | --- |

—

each Member of the Clean Sky Joint Undertaking,

| — | each Partner. |
| --- | --- |

—

each Partner.

6 —   The STAB

The Scientific and Technological Advisory Board is an advisory body to the Governing Board. Composed of high-level scientists and engineers, its purpose is to focus on the scientific and technical analysis of the Clean Sky Joint Undertaking from different perspectives: environmental impact; technology and scientific forecast; societal aspects; economics.

7 —   External audit

European Court of Auditors.

8 —   Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources available to the Joint Undertaking in 2010

Budget

168 553 053 euro

Staff at 31 December 2010

24 posts provided for in the establishment plan (temporary staff and contract staff) of which 20 posts were occupied

Other staff:

| — | Seconded National Experts: 0 |
| --- | --- |

—

Seconded National Experts: 0

| — | Contract staff: 3 |
| --- | --- |

—

Contract staff: 3

| — | Local staff: 0 |
| --- | --- |

—

Local staff: 0

| — | Total staff employed: 20 |
| --- | --- |

—

Total staff employed: 20

Allocated to:

| — | Operational activities: 8 |
| --- | --- |

—

Operational activities: 8

| — | Administrative tasks: 9 |
| --- | --- |

—

Administrative tasks: 9

| — | Mixed tasks: 3 |
| --- | --- |

—

Mixed tasks: 3

Activities and services provided in 2010

Smart Fixed-Wing Aircraft

The aerodynamic definition of the laminar wing design. The feasibility phase for the CROR-engine integration and CROR demo-FTB including numerical simulation, and subscale ground testing, has been performed. The gate to launch the design and manufacturing of the High Speed Demonstrator Passive flight test articles has been passed positively. The first laminar wing ground demonstrator (the upper wing panel) has been successfully manufactured.

Green Regional Aircraft

Three domains of activity, LWC, LNC and AEA, reached significant milestones in 2010, including preliminary definition of the 3D model of the Natural Laminar Flow wing, architecture of the All Electrical Aircraft concept, intelligent Structural Health Monitoring (SHM) demonstration in the scale of the wing panel, improvement of composite materials characteristics (positive laboratory test on hail impact). These domains are the contributors to Flight Test that is currently planned using an ATR aircraft.

Green Rotorcraft

(highlights only ...) The active twist concept from Friendcopter has been explored and evaluated. Development of methods necessary for the optimisation of blade design, actuation system integration, sensory data transmission, and power transfer and control algorithms has been performed. The definition of both modelling and wind tunnel testing has been made. The launch of the partner activity on the electrical tail rotor took place in November, which is a major milestone for GRC3. The study of the Diesel engine and the optimisation of the helicopter to be powered have been launched. The integration of the flying helicopter demonstrator roadmap has been set, with the adaptation of helicopter specifications to an aeronautical Diesel engine and transformation of a turbine powered light helicopter. The specification for Environment-Friendly Flight Paths and Low Noise Procedures, following a review of the existing requirements applicable to the H/C flight, has been performed. A significant effort was dedicated to the implementation of the platform of simulation called Phoenix (standing for Platform Hosting Operational & Environmental Investigations for Rotorcraft).

Sustainable and Green Engines (among others ...)

The analysis of open rotor wind tunnel test data has progressed and the noise modelling tools have been revised to reflect new learning from the rig tests. A trade-off study between the direct drive and geared Open rotor has been performed.

| — | Annulus filler design concept selection review, |
| --- | --- |

—

Annulus filler design concept selection review,

| — | Annulus filler material and manufacture process review, |
| --- | --- |

—

Annulus filler material and manufacture process review,

| — | Composite casing material and manufacture process review, |
| --- | --- |

—

Composite casing material and manufacture process review,

| — | Initial Modules and Engine Modifications Concept Design Review, |
| --- | --- |

—

Initial Modules and Engine Modifications Concept Design Review,

| — | Initial High Pressure Compressor Concept Design Review, |
| --- | --- |

—

Initial High Pressure Compressor Concept Design Review,

| — | Initial High-Speed Low Pressure Turbine Concept Design Review. |
| --- | --- |

—

Initial High-Speed Low Pressure Turbine Concept Design Review.

The Design Review for the Core Study and the Whole engine study was performed. Many technologies were passed into review, and selection was done for the demonstrator.

Systems for Green operations

Requirement for both Large aircraft and Regional aircraft types have been analysed. Further development of the modelling tools to assess various architectures at aircraft level; further specification of the architecture of the electrical architecture.

Further maturation of the technologies of the various components, like ice protection systems, power generators/converters, electrical environmental control system, electrical engine nacelle systems.

Promising functions for MTM have been further investigated and the following ones have been retained:

| — | Green take-off and climb function |
| --- | --- |

—

Green take-off and climb function

| — | Green Cruise function (stepped climb as well as continuous climb) |
| --- | --- |

—

Green Cruise function (stepped climb as well as continuous climb)

| — | Green approach function. |
| --- | --- |

—

Green approach function.

Eco-Design

Deployment of the Modelling Computer Platform (MCP): system requirements and validation plan issued in November 2010.

Choice of simulation tool for Electrical Network Analysis Model (ENAM) (SABER) and the corresponding specification / documentation documents have been issued in October 2010.

Development of a SABER conversion software tool: CfP ‘SMART’ project kicked off in September 2010.

Technology Evaluator

The analysis of results of External related projects (including Sourdine II, Optimal, and ERAT), and related Networks of Excellence. The scope was to investigate the experiences with the used models, data, and assessment procedures, in order to verify potential for synergies and collaborations.

Exchanges with SESAR have also been initiated, together with SGO, with some dedicated workshops. In 2011 the implementation of more detailed collaboration will be possible, thanks to the MoU signed between Clean Sky and SESAR.

Source: Information supplied by the Clean Sky Joint Undertaking.

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REPLIES OF THE CLEAN SKY JOINT UNDERTAKING

Paragraph 16

The Joint Undertaking has taken steps to improve the structure and presentation of the 2011 budget so that the requirements of the legal framework are met.

Paragraph 17

While the Court is aware of the reason for the delay in implementation, the JU has taken steps during 2010 to ensure, as far as possible, that further delays and therefore lower budget implementation do not continue during the programme. Having received the cost claims relating to 2010, the JU has noticed an improvement in the rate of activity and budget implementation. The JU endeavours to continue this improvement with its Members and Partners.

Paragraph 18

The Joint Undertaking took note of the lessons learned from the first exercise and has implemented improvements in its ex-ante controls in 2011. A more consistent and comprehensive check was undertaken in 2011 including a revision of the cost claims from 2008 and 2009.

Paragraph 19

As stated above, through the revision of the ex-ante controls on the 2008 and 2009 cost claims, the cases highlighted by the Court have been revisited and follow-up actions are underway to resolve the situation before the end of 2011 with the concerned beneficiaries.

Paragraph 20

The Joint Undertaking is working closely with the other JTIs in order to put the necessary documentation in place. Actions have started on all issues mentioned by the Court and will be finalised within 2011.

Paragraph 21

The Accounting Officer has taken note of various guidance on this issue and during August 2011 has begun this exercise in the JU.

Paragraph 22

Following the remarks of the Court and based on a dedicated risk assessment of the JU's Internal Control system, the Internal Audit Officer of the JU provided professional advice and consultancy services related to the ex-ante validation of cost claims in the year 2010 and 2011. She also coordinated and managed the ex-post audit process of the JU in 2011. It is envisaged, that for objectivity reasons, the Internal Audit Service of the Commission (IAS) will perform an audit of the financial implementation of the JU's Grant Management in the year 2012.

Paragraph 23

The JU is taking action to fully complete the internal procedures to supervise the application of the provisions already included in the grant agreements and consortium agreements regarding the protection, use and dissemination of research results.

Paragraph 24

In the context of the revision of the Commission's Framework Financial Regulation applicable for the Joint Undertakings, the JU will assess the need for an amendment of the Clean Sky Financial Rules with a view to the role of the Commission's internal auditor.

Paragraph 25

A draft of the host State agreement has been submitted to the Belgian Government for approval. It has been informally confirmed but official confirmation is expected. The signature of both the JU and the Belgian State will follow a related adoption of the document by the Governing Board.

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| 16.12.2011 | EN | Official Journal of the European Union | C 368/17 |
| --- | --- | --- | --- |

16.12.2011

EN

Official Journal of the European Union

C 368/17

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REPORT

on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/03

INTRODUCTION

| 1. | The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
| --- | --- |

1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process, with the long-term aim that the pharmaceutical sector produces more effective and safer innovative medicines (2). |
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2.

The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process, with the long-term aim that the pharmaceutical sector produces more effective and safer innovative medicines (2).

| 3. | The Founding Members of the Joint Undertaking are the European Union, represented by the European Commission, and the European Federation of Pharmaceutical Industries and Associations (EFPIA). Any legal entity directly or indirectly supporting research and development in a Member State or in a country associated with the Seventh Framework Programme (3) may apply to become a Member of the IMI Joint Undertaking. |
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3.

The Founding Members of the Joint Undertaking are the European Union, represented by the European Commission, and the European Federation of Pharmaceutical Industries and Associations (EFPIA). Any legal entity directly or indirectly supporting research and development in a Member State or in a country associated with the Seventh Framework Programme (3) may apply to become a Member of the IMI Joint Undertaking.

| 4. | The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is 1 billion euro, to be paid from the budget of the Seventh Framework Programme. The EU and EFPIA, as Founding Members, are to contribute equally to the running costs, each with an amount not exceeding 4 % of the total EU contribution. Other Members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind (4) contributions at least equal to the EU financial contribution (5). |
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4.

The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is 1 billion euro, to be paid from the budget of the Seventh Framework Programme. The EU and EFPIA, as Founding Members, are to contribute equally to the running costs, each with an amount not exceeding 4 % of the total EU contribution. Other Members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind (4) contributions at least equal to the EU financial contribution (5).

| 5. | The Joint Undertaking started to work autonomously on 16 November 2009. |
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5.

The Joint Undertaking started to work autonomously on 16 November 2009.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union the Court has audited the annual accounts (6) of the Innovative Medicines Initiative Joint Undertaking, which comprise the ‘financial statements’ (7) and the ‘reports on the implementation of the budget’ (8) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts. |
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6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union the Court has audited the annual accounts (6) of the Innovative Medicines Initiative Joint Undertaking, which comprise the ‘financial statements’ (7) and the ‘reports on the implementation of the budget’ (8) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (9). |
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7.

This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (9).

The Director's responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's financial rules, under his own responsibility and within the limits of the authorised appropriations (10). The Director is responsible for putting in place (11) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (12) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
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8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's financial rules, under his own responsibility and within the limits of the authorised appropriations (10). The Director is responsible for putting in place (11) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (12) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

The Court's responsibility

| 9. | The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
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9.

The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (13) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
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10.

The Court conducted its audit in accordance with the IFAC and ISSAI (13) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
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11.

The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
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12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 13. | In the Court's opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010, the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules. |
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13.

In the Court's opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010, the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

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

| 14. | In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
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14.

In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 15. | The comments which follow in paragraphs 16-24 do not call the Court's opinions into question. |
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15.

The comments which follow in paragraphs 16-24 do not call the Court's opinions into question.

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | The 2010 annual budget and implementation plan were not adopted by the Governing Board until 16 March 2010 (14). The late adoption was due to the Members of the Joint Undertaking taking a long time to establish and agree on the scientific priorities to be included in the annual implementation plan. This delayed the launch of the call for proposals. During the year, the Joint Undertaking launched the third call for proposals (15), finalised the negotiation process for the second call for proposals (16) and started to receive and pay cost claims from the beneficiaries participating in the projects funded under the first call for proposals (17). |
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16.

The 2010 annual budget and implementation plan were not adopted by the Governing Board until 16 March 2010 (14). The late adoption was due to the Members of the Joint Undertaking taking a long time to establish and agree on the scientific priorities to be included in the annual implementation plan. This delayed the launch of the call for proposals. During the year, the Joint Undertaking launched the third call for proposals (15), finalised the negotiation process for the second call for proposals (16) and started to receive and pay cost claims from the beneficiaries participating in the projects funded under the first call for proposals (17).

| 17. | The final budget included commitment appropriations of 107 million euro and payment appropriations of 29 million euro. Additionally, 3 million euro in commitment appropriations and 78,6 million euro in payment appropriations were carried over from 2009. The utilisation rates for available commitment and payment appropriations were 6 % and 35 % respectively, 98,6 million euro in commitment appropriations were carried over to 2011 and 64 million euro of payment appropriations carried over from 2009 were cancelled at the end of the year. The low implementation of the budget is also reflected in the cash balance, which stood at 71 million euro at the end of the year (65 % of the available payment appropriations in 2010). |
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17.

The final budget included commitment appropriations of 107 million euro and payment appropriations of 29 million euro. Additionally, 3 million euro in commitment appropriations and 78,6 million euro in payment appropriations were carried over from 2009. The utilisation rates for available commitment and payment appropriations were 6 % and 35 % respectively, 98,6 million euro in commitment appropriations were carried over to 2011 and 64 million euro of payment appropriations carried over from 2009 were cancelled at the end of the year. The low implementation of the budget is also reflected in the cash balance, which stood at 71 million euro at the end of the year (65 % of the available payment appropriations in 2010).

Internal control systems

| 18. | The Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010. In particular, further work is needed in establishing and documenting the accounting procedures and controls relating to the closure of the accounts and the recognition and measurement of the operational expenditure. These are important elements of the Joint Undertaking's system of internal control. |
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18.

The Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010. In particular, further work is needed in establishing and documenting the accounting procedures and controls relating to the closure of the accounts and the recognition and measurement of the operational expenditure. These are important elements of the Joint Undertaking's system of internal control.

| 19. | Furthermore, at the end of 2010 the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Joint Undertaking's financial rules. |
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19.

Furthermore, at the end of 2010 the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Joint Undertaking's financial rules.

| 20. | The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (18). |
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20.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (18).

| 21. | The ex-post audit strategy (19) of the Joint Undertaking was adopted by a Governing Board decision on 14 December 2010 and is a key control for assessing the legality and regularity of the underlying transactions. This strategy envisages that the audit population (20) will increase progressively as from 2011 when projects relating to several calls will be running in parallel and cost claims for these projects will be submitted. |
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21.

The ex-post audit strategy (19) of the Joint Undertaking was adopted by a Governing Board decision on 14 December 2010 and is a key control for assessing the legality and regularity of the underlying transactions. This strategy envisages that the audit population (20) will increase progressively as from 2011 when projects relating to several calls will be running in parallel and cost claims for these projects will be submitted.

Methodology for evaluating contributions in kind

| 22. | The methodology for evaluating contributions in-kind has not yet been approved by the Governing Board (21) as it proved difficult for an agreement to be reached. As a consequence, the EFPIA members were unable to report on the costs incurred during the first reporting period as established in the grant agreements. |
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22.

The methodology for evaluating contributions in-kind has not yet been approved by the Governing Board (21) as it proved difficult for an agreement to be reached. As a consequence, the EFPIA members were unable to report on the costs incurred during the first reporting period as established in the grant agreements.

OTHER MATTERS

Internal audit function and the Commission's Internal Audit Service

| 23. | In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission's internal auditor. Although the Joint Undertaking's financial rules have not yet been amended to include the provision referring to the powers of the Commission's internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission's Internal Audit Service and the Joint Undertaking's internal auditing function are clearly defined. |
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23.

In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission's internal auditor. Although the Joint Undertaking's financial rules have not yet been amended to include the provision referring to the powers of the Commission's internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission's Internal Audit Service and the Joint Undertaking's internal auditing function are clearly defined.

Lack of host State agreement

| 24. | As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed. |
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24.

As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Council Regulation (EC) No 73/2008 of 20 December 2007 setting up the Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (OJ L 30, 4.2.2008, p. 38).

1

(2)  The Annex summarises the Joint Undertaking's competences, activities and available resources. It is presented for information purposes.

2

Annex

(3)  The Seventh Framework Programme, adopted by Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006, brings all the research-related EU initiatives together under one roof and plays a crucial role in reaching the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.

3

(4)  According to Article 11(4) of the Annex to the Council Regulation setting up the Joint Undertaking, the in-kind contributions are ‘non-monetary contributions by the research based pharmaceutical companies that are members of EFPIA with resources such as personnel, equipment, consumables, etc.’

4

(5)  According to Article 11(5) of the Annex to the Council Regulation setting up the Joint Undertaking, ‘the participating research based pharmaceutical companies that are members of EFPIA shall not be eligible to receive any financial support from the IMI Joint Undertaking for any activity’.

5

(6)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

6

(7)  The financial statements include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and the annex to the financial statements, which includes a description of the main accounting policies and other explanatory information.

7

(8)  The budget implementation reports comprise the budget outturn account and its annex.

8

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

9

(10)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

10

(11)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

11

(12)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are integrated as such in the financial rules of the Joint Undertaking.

12

(13)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

13

(14)  The budget rule 1/12 was used to make payments until budget adoption.

14

(15)  The third call for proposals was launched on 22 October 2010.

15

(16)  The second call for proposals was launched on 27 November 2009.

16

(17)  The first call for proposals was launched on 30 April 2008 and was managed by the Commission.

17

(18)  Namely: (a) incomplete strategic IT planning and monitoring cycle; (b) lack of formal security policies and rules; (c) incomplete IT Risk management; and (d) lack of formal Business Continuity Plan (BCP) and complete and tested Disaster Recovery Plan (DRP).

18

(19)  Article 12(4) of the Council Regulation setting up the Joint Undertaking states that ‘the IMI Joint Undertaking shall carry out on-the-spot checks and financial audits among the participants of the Research Activities funded by the IMI Joint Undertaking’.

19

(20)  The audit population is represented by cost claims received from project beneficiaries based on eligible costs and from EFPIA members based on in-kind contributions. The value of the cost claims corresponding to 2010 is estimated at 24,6 million euro.

20

(21)  Article 11(4) of the Annex to the Council Regulation setting up the Joint Undertaking stipulates that ‘the methodology for evaluating contributions in-kind shall be defined in the internal rules and procedures of the Joint Undertaking, in compliance with its financial rules and based on the rules of participation of the Seventh Framework Programme’.

21

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ANNEX

Innovative Medicines Initiative Joint Undertaking (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Extracts from Articles 187 and 188 of the Treaty on the Functioning of the European Union) | Article 187:
  The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.
  Article 188:
  The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187.
  The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall adopt the provisions referred to in Articles 183, 184 and 185. Adoption of the supplementary programmes shall require the agreement of the Member States concerned. |
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| Competences of the Joint Undertaking | Objectives


  (Article 2 of Council Regulation (EC) No 73/2008 setting up the Joint Undertaking)

  The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produces more effective and safer innovative medicines. In particular it shall:






  (a) | support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcome the identified research bottlenecks in the drug development process; |

Areas of Union competence deriving from the Treaty

(Extracts from Articles 187 and 188 of the Treaty on the Functioning of the European Union)

Article 187:

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

Article 188:

The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall adopt the provisions referred to in Articles 183, 184 and 185. Adoption of the supplementary programmes shall require the agreement of the Member States concerned.

Competences of the Joint Undertaking

Objectives

(Article 2 of Council Regulation (EC) No 73/2008 setting up the Joint Undertaking)

The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produces more effective and safer innovative medicines. In particular it shall:

(a)

support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcome the identified research bottlenecks in the drug development process;

| (b) | support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals; |
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(b)

support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals;

| (c) | ensure complementarity with other activities of the Seventh Framework Programme; |
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(c)

ensure complementarity with other activities of the Seventh Framework Programme;

| (d) | be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated with the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors; |
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(d)

be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated with the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors;

| (e) | promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme. |
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(e)

promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme.

Tasks

(Article 1 of the Annex – Statutes of the Joint Undertaking for the Implementation of the Joint Technology Initiative on Innovative Medicines)

The main tasks and activities of the Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘IMI Joint Undertaking’) shall be the following:

| (a) | to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’; |
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(a)

to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’;

| (b) | to define and carry out the annual implementation plan referred to in Article 18 via calls for projects; |
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(b)

to define and carry out the annual implementation plan referred to in Article 18 via calls for projects;

| (c) | to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in the light of scientific developments occurring during its implementation; |
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(c)

to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in the light of scientific developments occurring during its implementation;

| (d) | to mobilise the public and private sector resources needed; |
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(d)

to mobilise the public and private sector resources needed;

| (e) | to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients' organisations, academia and clinical centres, as well as cooperation between industry and academia; |
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(e)

to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients' organisations, academia and clinical centres, as well as cooperation between industry and academia;

| (f) | to facilitate coordination with national and international activities in this area; |
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(f)

to facilitate coordination with national and international activities in this area;

| (g) | to undertake communication and dissemination activities; |
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(g)

to undertake communication and dissemination activities;

| (h) | to communicate and interact with the Member States and the countries associated with the Seventh Framework Programme via a group specifically established for this purpose (hereinafter referred to as the ‘IMI States Representatives Group’); |
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(h)

to communicate and interact with the Member States and the countries associated with the Seventh Framework Programme via a group specifically established for this purpose (hereinafter referred to as the ‘IMI States Representatives Group’);

| (i) | to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders; |
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(i)

to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders;

| (j) | to notify legal entities that have concluded a grant agreement (hereinafter referred to as ‘Grant Agreement’) with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme; |
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(j)

to notify legal entities that have concluded a grant agreement (hereinafter referred to as ‘Grant Agreement’) with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme;

| (k) | to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant; |
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(k)

to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant;

| (l) | to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’; |
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(l)

to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’;

| (m) | to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation. |
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(m)

to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation.

Governance

(Article 4 of the Annex to Council Regulation (EC) No 73/2008 – Statutes of the Joint Undertaking for the Implementation of the Joint Technology Initiative on Innovative Medicines)

1 —   The Governing Board

2 —   The Executive Director

3 —   The Scientific Committee

4 —   Two Advisory Bodies

The IMI States Representatives Group and the Stakeholder Forum.

5 —   Internal audit

| — | the Internal Auditor of the European Commission, |
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—

the Internal Auditor of the European Commission,

(Article 10 of the Annex to Council Regulation (EC) No 73/2008 – Statutes of the Joint Undertaking for the Implementation of the Joint Technology Initiative on Innovative Medicines)

| — | internal audit capability within the IMI JU. |
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—

internal audit capability within the IMI JU.

(Article 6 of Council Regulation (EC) No 73/2008)

6 —   External audit

The European Court of Auditors.

(Article 17(5) of the Statutes annexed to Council Regulation (EC) No 73/2008 and Article 126 of the IMI's financial rules).

7 —   Discharge authority

The European Parliament, acting on a recommendation from the Council.

(Article 11(4) of Council Regulation (EC) No 73/2008 and Article 129 of the IMI's financial rules)

Resources available to the Joint Undertaking in 2010

Budget

(Article 7(4) of Council Regulation (EC) No 73/2008 on staff resources)

The final budget included commitment appropriations of 107 million euro and payment appropriations of 29 million euro. Additionally, 3 million euro in commitment appropriations and 78,6 million euro in payment appropriations were carried over from 2009.

Staff at 31 December 2010

29 posts provided for in the establishment plan, of which, 18 posts were occupied.

Other staff:

| — | Seconded National Experts: 0, |
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—

Seconded National Experts: 0,

| — | contract staff: 4, |
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—

contract staff: 4,

| — | local staff: 0, |
| --- | --- |

—

local staff: 0,

total staff employed: 22.

Allocated to:

| — | operational activities: 4, |
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—

operational activities: 4,

| — | administrative tasks: 7 (1), |
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—

administrative tasks: 7 (1),

| — | mixed tasks: 11. |
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—

mixed tasks: 11.

Activities and services provided in 2010

Launched or prepared for new calls for proposals, evaluation, negotiation, grant management, ongoing contact, support and guidance to beneficiaries and other participants, communication and organisation of meetings and events with key stakeholders, as well as consultations and support to the Founding Members on the innovative medicine research strategy and associated activities.

Source: Information supplied by the IMI JU.

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(1)  The number refers to administrative assistants with administrative tasks.

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REPLIES OF THE JOINT UNDERTAKING

Implementation of the budget

Paragraphs 16 and 17

IMI JU has taken several initiatives to facilitate and expedite the implementation of the budget, including the revision of the Scientific Research Agenda, the launch of the third and fourth calls for proposals, the conclusion of negotiations and the signature of grant agreements for new projects funded under the second call, as well as the receipt and payment of cost claims from the beneficiaries participating in projects funded under the first call. In collaboration with the Founding Members, the Executive Office is also exploring ways of how it can simplify and streamline its call management processes and shorten time lines.

Internal Control Systems

Paragraphs 18 and 21

IMI JU’s internal control system is being further consolidated through the systematic review, strengthening and formalisation of internal processes, including IT policies and procedures. Ex-post audits of first cost claims received from project beneficiaries will also be launched by the end of 2011.

In parallel, the creation of a new senior management position responsible for Administration and Finance as well as the establishment of the internal control and the internal audit functions further enhances the overall management and oversight of IMI JU’s implementation of the internal control framework.

The validation of the underlying business processes supporting the accounting system by the Accounting Officer was concluded in June 2011. The implementation of the recommendations resulting from this exercise will lead to further strengthening of internal controls.

Methodology for evaluating in-kind contributions

Paragraph 22

There are ongoing consultations on the methodology to be used for the evaluation of in-kind contributions by member companies of the European Foundation of Pharmaceutical Industries and Associations (EFPIA) in IMI JU projects. Individual reports on the in-kind contributions will be submitted following the approval by the Governing Board of the revised model grant agreement.

Internal Audit Function and the Commission’s Internal Audit Service

Paragraph 23

The roles of the IMI JU’s Internal Audit Manager (IAC) and the Internal Audit Service of the European Commission (IAS) were clarified and formalised through the approval, in March 2011, of the IAS and IAC Audit Charters. A coordinated strategic audit plan for the period 2012-14 is also being prepared to ensure that the impact of planned audits is optimised and any duplication of audit work between the IAS and IAC is minimised.

The need to further clarify the role of the IAS in IMI JU’s financial rules will be assessed after the finalisation of the ongoing revision of the European Commission’s Framework Financial Regulation.

Lack of host State Agreement

Paragraph 24

There are ongoing proceedings with the Belgian authorities for the signature of the Host Agreement. It is expected to be signed by the end of 2011.

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| 16.12.2011 | EN | Official Journal of the European Union | C 368/24 |
| --- | --- | --- | --- |

16.12.2011

EN

Official Journal of the European Union

C 368/24

---

REPORT

on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/04

INTRODUCTION

| 1. | The European Joint Undertaking for ITER (1) and the Development of Fusion Energy was set up in March 2007 (2) for a period of 35 years. While the main fusion facilities are to be developed at Cadarache in France, the Joint Undertaking is located in Barcelona. |
| --- | --- |

1.

The European Joint Undertaking for ITER (1) and the Development of Fusion Energy was set up in March 2007 (2) for a period of 35 years. While the main fusion facilities are to be developed at Cadarache in France, the Joint Undertaking is located in Barcelona.

| 2. | The tasks of the Joint Undertaking are (3):






  (a) | to provide the contribution of Euratom to the ITER International Fusion Energy Organisation (4); |
| --- | --- | --- |

2.

The tasks of the Joint Undertaking are (3):

(a)

to provide the contribution of Euratom to the ITER International Fusion Energy Organisation (4);

| (b) | to provide the contribution of Euratom to the ‘Broader Approach Activities’ (complementary joint fusion research) with Japan for the rapid development of fusion energy; and |
| --- | --- |

(b)

to provide the contribution of Euratom to the ‘Broader Approach Activities’ (complementary joint fusion research) with Japan for the rapid development of fusion energy; and

| (c) | to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility. |
| --- | --- |

(c)

to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility.

| 3. | The members of the Joint Undertaking are Euratom, represented by the European Commission, the Member States of Euratom and other countries which have concluded cooperation agreements with Euratom in the field of controlled nuclear fusion and have expressed their wish to become Members (at 31 December 2010: Switzerland). |
| --- | --- |

3.

The members of the Joint Undertaking are Euratom, represented by the European Commission, the Member States of Euratom and other countries which have concluded cooperation agreements with Euratom in the field of controlled nuclear fusion and have expressed their wish to become Members (at 31 December 2010: Switzerland).

| 4. | When the Joint Undertaking was set up, the indicative total resources deemed necessary for the period 2007 to 2041 were 9 653 million euro. The total contribution from Euratom was set at 7 649 million euro, of which a maximum of 15 % for administrative expenditure. Other resources consist of contributions from the ITER host state (France), the annual membership contributions, voluntary contributions from members other than Euratom, and additional resources to be received under terms approved by the Governing Board. The Court draws attention to the requirement for substantially increased resources for the ITER project (see paragraphs 27-29). |
| --- | --- |

4.

When the Joint Undertaking was set up, the indicative total resources deemed necessary for the period 2007 to 2041 were 9 653 million euro. The total contribution from Euratom was set at 7 649 million euro, of which a maximum of 15 % for administrative expenditure. Other resources consist of contributions from the ITER host state (France), the annual membership contributions, voluntary contributions from members other than Euratom, and additional resources to be received under terms approved by the Governing Board. The Court draws attention to the requirement for substantially increased resources for the ITER project (see paragraphs 27-29).

STATEMENT OF ASSURANCE

| 5. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (5) of the European Joint Undertaking for ITER and the Development of Fusion Energy, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

5.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (5) of the European Joint Undertaking for ITER and the Development of Fusion Energy, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

| 6. | This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (8). |
| --- | --- |

6.

This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (8).

The Director's responsibility

| 7. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's Financial Regulation, under his own responsibility and within the limits of the authorised appropriations (9). The Director is responsible for putting in place (10) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (11) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
| --- | --- |

7.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's Financial Regulation, under his own responsibility and within the limits of the authorised appropriations (9). The Director is responsible for putting in place (10) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (11) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

The Court's responsibility

| 8. | The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
| --- | --- |

8.

The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 9. | The Court conducted its audit in accordance with the IFAC and ISSAI (12) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
| --- | --- |

9.

The Court conducted its audit in accordance with the IFAC and ISSAI (12) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

| 10. | The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
| --- | --- |

10.

The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 11. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
| --- | --- |

11.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 12. | In the Court's opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation. |
| --- | --- |

12.

In the Court's opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation.

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

| 13. | In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
| --- | --- |

13.

In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 14. | The comments which follow do not call the Court's opinions into question. |
| --- | --- |

14.

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

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 15. | The final budget included commitment appropriations of 444,1 million euro and payment appropriations of 241,7 million euro. Carry-overs from 2009 amounted to 106,8 million euro in commitment appropriations and 52,2 million euro in payment appropriations (mainly appropriations accruing from the ITER host state and assigned to the ITER construction). The utilisation rate for payment appropriations was only 63,4 % (13) as a result of the delays in implementing activities and this is also reflected in the high cash balance, which amounted to 78,8 million euro at the end of the year (26,8 % of the available payment appropriations in 2010). |
| --- | --- |

15.

The final budget included commitment appropriations of 444,1 million euro and payment appropriations of 241,7 million euro. Carry-overs from 2009 amounted to 106,8 million euro in commitment appropriations and 52,2 million euro in payment appropriations (mainly appropriations accruing from the ITER host state and assigned to the ITER construction). The utilisation rate for payment appropriations was only 63,4 % (13) as a result of the delays in implementing activities and this is also reflected in the high cash balance, which amounted to 78,8 million euro at the end of the year (26,8 % of the available payment appropriations in 2010).

Reorganisation of the Joint Undertaking and internal control systems

| 16. | The Court of Auditors reported in its two previous Specific Annual Reports that the Joint Undertaking's internal control systems had not been fully established and implemented as required by its Financial Regulation (14). Similarly, on 31 May 2010 the Joint Undertaking's Internal Auditor issued a report on the financial circuits which raised concerns about the financial circuits and the separation of duties. |
| --- | --- |

16.

The Court of Auditors reported in its two previous Specific Annual Reports that the Joint Undertaking's internal control systems had not been fully established and implemented as required by its Financial Regulation (14). Similarly, on 31 May 2010 the Joint Undertaking's Internal Auditor issued a report on the financial circuits which raised concerns about the financial circuits and the separation of duties.

| 17. | In response to this, the Governing Board adopted a management improvement plan in June 2010 and, in October, a proposal to change the organisational structure. The new organisational structure (15) became operational on 1 January 2011. |
| --- | --- |

17.

In response to this, the Governing Board adopted a management improvement plan in June 2010 and, in October, a proposal to change the organisational structure. The new organisational structure (15) became operational on 1 January 2011.

| 18. | Despite these changes, the responsibility for the financial circuits had still not been fully assigned at the time of the audit (April 2011), since some key posts were still vacant (16) (e.g. Head of ITER department, Head of Administration and Head of Budget and Finance unit). |
| --- | --- |

18.

Despite these changes, the responsibility for the financial circuits had still not been fully assigned at the time of the audit (April 2011), since some key posts were still vacant (16) (e.g. Head of ITER department, Head of Administration and Head of Budget and Finance unit).

IT systems

| 19. | While the financial and accounting systems (ABAC and SAP) used by the Joint Undertaking are owned by the Commission and have been validated by the Accounting Officer, the other important business processes which provide financial information have not yet been validated. As mentioned in the Court's 2009 report (17), an appropriate tool for the management of the operational contracts (ABAC contracts or similar), integrated with the budget and financial reporting systems, is not yet in place. |
| --- | --- |

19.

While the financial and accounting systems (ABAC and SAP) used by the Joint Undertaking are owned by the Commission and have been validated by the Accounting Officer, the other important business processes which provide financial information have not yet been validated. As mentioned in the Court's 2009 report (17), an appropriate tool for the management of the operational contracts (ABAC contracts or similar), integrated with the budget and financial reporting systems, is not yet in place.

OTHER MATTERS

Grants and procurement

| 20. | The Court tested a sample of nine procurement and six grant award procedures. For three of the nine procurement procedures audited, only one offer had been received by the Joint Undertaking. For the grants, the average number of proposals received was only one per call. While recognising the fact that the Joint Undertaking is operating in a highly specialised industrial area, the Court recommends that it should make further efforts to maximise competition and should follow the value-for-money principle in the call preparation, publication, evaluation and contract management phases. |
| --- | --- |

20.

The Court tested a sample of nine procurement and six grant award procedures. For three of the nine procurement procedures audited, only one offer had been received by the Joint Undertaking. For the grants, the average number of proposals received was only one per call. While recognising the fact that the Joint Undertaking is operating in a highly specialised industrial area, the Court recommends that it should make further efforts to maximise competition and should follow the value-for-money principle in the call preparation, publication, evaluation and contract management phases.

| 21. | The controls applied by the Joint Undertaking before payments are made under grant agreements are not sufficiently documented to provide assurance regarding compliance with the financial requirements and the eligibility of the underlying costs (18). |
| --- | --- |

21.

The controls applied by the Joint Undertaking before payments are made under grant agreements are not sufficiently documented to provide assurance regarding compliance with the financial requirements and the eligibility of the underlying costs (18).

| 22. | The Court welcomes the fact that the Joint Undertaking has started to develop an ex-post audit strategy, to be implemented in 2012. The ex-post audit strategy is a key control aiming to assess the legality and regularity of the underlying transactions and should be put in place as soon as possible. It should also cover grants and operational procurement contracts. |
| --- | --- |

22.

The Court welcomes the fact that the Joint Undertaking has started to develop an ex-post audit strategy, to be implemented in 2012. The ex-post audit strategy is a key control aiming to assess the legality and regularity of the underlying transactions and should be put in place as soon as possible. It should also cover grants and operational procurement contracts.

Late payment of membership contributions

| 23. | In 2008 and 2009, the Court observed that a number of Members of the Joint Undertaking did not pay their membership contributions within the deadline set by the Governing Board. For 2010, the deadline was 31 May 2010 but only 14 out of the 28 Members paid on time. |
| --- | --- |

23.

In 2008 and 2009, the Court observed that a number of Members of the Joint Undertaking did not pay their membership contributions within the deadline set by the Governing Board. For 2010, the deadline was 31 May 2010 but only 14 out of the 28 Members paid on time.

Commission Internal Audit Service

| 24. | The Court pointed out in its Opinion No 4/2008 that the Financial Regulation of the Joint Undertaking does not refer to the powers of the Commission's internal auditor to perform audits of the Joint Undertaking. Although the Financial Regulation of the Joint Undertaking has not yet been amended to include the powers of the Commission's internal auditor (19), the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission's Internal Audit Service and the Joint Undertaking's internal auditing function are clearly defined. |
| --- | --- |

24.

The Court pointed out in its Opinion No 4/2008 that the Financial Regulation of the Joint Undertaking does not refer to the powers of the Commission's internal auditor to perform audits of the Joint Undertaking. Although the Financial Regulation of the Joint Undertaking has not yet been amended to include the powers of the Commission's internal auditor (19), the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission's Internal Audit Service and the Joint Undertaking's internal auditing function are clearly defined.

Audit Committee of the Joint Undertaking

| 25. | The Court also pointed out in its Opinion No 4/2008 that, in view of the size of the budget and the complexity of the tasks to be performed by the Joint Undertaking, an Audit Committee reporting directly to the Governing Board should be set up. The Court welcomes the decision of the Governing Board to set up an Audit Committee (20). |
| --- | --- |

25.

The Court also pointed out in its Opinion No 4/2008 that, in view of the size of the budget and the complexity of the tasks to be performed by the Joint Undertaking, an Audit Committee reporting directly to the Governing Board should be set up. The Court welcomes the decision of the Governing Board to set up an Audit Committee (20).

Host State agreement

| 26. | The host agreement on the site and support, privileges and immunities that was signed between the Kingdom of Spain and the Joint Undertaking on 28 June 2007 states that permanent premises are to be made available to the Joint Undertaking no later than 3 years after the signing of the agreement. At the time of the audit, permanent premises had not been made available to the Joint Undertaking. |
| --- | --- |

26.

The host agreement on the site and support, privileges and immunities that was signed between the Kingdom of Spain and the Joint Undertaking on 28 June 2007 states that permanent premises are to be made available to the Joint Undertaking no later than 3 years after the signing of the agreement. At the time of the audit, permanent premises had not been made available to the Joint Undertaking.

Status of the financing of the ITER project

| 27. | In May 2010, the Commission issued a communication to the European Parliament and to the Council on the status of the ITER project (21), in which it estimated that around 1,4 billion euro will be needed to meet the cost increases in the Euratom contribution to ITER in 2012 and 2013. |
| --- | --- |

27.

In May 2010, the Commission issued a communication to the European Parliament and to the Council on the status of the ITER project (21), in which it estimated that around 1,4 billion euro will be needed to meet the cost increases in the Euratom contribution to ITER in 2012 and 2013.

| 28. | In July 2010, the Commission made a proposal to amend the current multiannual financial framework and to meet the additional financial needs for 2012 and 2013 (22). The European Parliament and the Council did not reach an agreement on this proposal. At the time of the audit (April 2011), the financing of the EU contribution to the ITER project remained unresolved. |
| --- | --- |

28.

In July 2010, the Commission made a proposal to amend the current multiannual financial framework and to meet the additional financial needs for 2012 and 2013 (22). The European Parliament and the Council did not reach an agreement on this proposal. At the time of the audit (April 2011), the financing of the EU contribution to the ITER project remained unresolved.

| 29. | The Court notes that these developments may significantly affect the activities and the budget of the Joint Undertaking and possibly delay the Euratom contribution to the construction phase of the ITER project. |
| --- | --- |

29.

The Court notes that these developments may significantly affect the activities and the budget of the Joint Undertaking and possibly delay the Euratom contribution to the construction phase of the ITER project.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  ITER: International Thermonuclear Experimental Reactor.

1

(2)  Council Decision 2007/198/Euratom of 27 March 2007 establishing the European Joint Undertaking for ITER and the Development of Fusion Energy and conferring advantages upon it (OJ L 90, 30.3.2007, p. 58).

2

(3)  The Annex summarises the Joint Undertaking's competences, activities and available resources. It is presented for information purposes.

3

Annex

(4)  The ITER International Fusion Energy Organisation was set up in October 2007 for an initial period of 35 years to implement the ITER project, which aims to demonstrate the scientific and technological feasibility of fusion energy. The Members are Euratom, the People's Republic of China, the Republic of India, Japan, the Republic of Korea, the Russian Federation and the United States of America.

4

(5)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

5

(6)  The financial statements include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and the annex to the financial statements, which includes a description of the main accounting policies and other explanatory information.

6

(7)  The budget implementation reports comprise the budget outturn account and its annex.

7

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

8

(9)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

9

(10)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

10

(11)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are integrated as such in the Financial Regulation of the European Joint Undertaking for ITER and the Development of Fusion Energy.

11

(12)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

12

(13)  55,8 million euro of payment appropriations were carried over to 2011, and 51,8 million euro of payment appropriations carried over from 2009 were cancelled at the end of the year.

13

(14)  Paragraph 21 of the 2009 report made reference to the reorganisation of the departmental structure of the Joint Undertaking which in the Court's view raised issues concerning the separation of duties between financial and operational activities.

14

(15)  The new organisational structure is oriented towards ‘project management’.

15

(16)  It is expected that these posts will be filled during 2011.

16

(17)  Paragraph 20 of the Court's 2009 report.

17

(18)  The Internal Auditor of the Joint Undertaking has also noted that the ex-ante control approach for payments of cost claims is not effective and not well prepared to process cost claims, although the underlying transactions are legal and regular.

18

ex-ante

(19)  See the Court's Opinion No 4/2008.

19

(20)  The Audit Committee is initially established for a period of 2 years and is composed of five persons, one of them designated by Euratom.

20

(21)  Communication from the Commission to the European Parliament and to the Council: ITER status and possible way forward, COM(2010) 226 final of 4 May 2010.

21

(22)  Proposal for a Decision of the European Parliament and of the Council amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework, to address additional financing needs of the ITER project, COM(2010) 403 final of 20 July 2010.

22

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ANNEX

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

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Extracts from Articles 45 and 49 of the Treaty establishing the European Atomic Energy Community) | Chapter 5, on ‘Joint Undertakings’, of the Treaty establishing the European Atomic Energy Community, and in particular: | Article 45:

  ‘Undertakings which are of fundamental importance to the development of the nuclear industry in the Community may be established as Joint Undertakings within the meaning of this Treaty, in accordance with the following Articles’ |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Extracts from Articles 45 and 49 of the Treaty establishing the European Atomic Energy Community)

Chapter 5, on ‘Joint Undertakings’, of the Treaty establishing the European Atomic Energy Community, and in particular:

Article 45:

‘Undertakings which are of fundamental importance to the development of the nuclear industry in the Community may be established as Joint Undertakings within the meaning of this Treaty, in accordance with the following Articles’

| | Article 49:
  Joint Undertakings shall be established by Council decision. Each Joint Undertaking shall have legal personality. |
| --- | --- |

Article 49:

Joint Undertakings shall be established by Council decision. Each Joint Undertaking shall have legal personality.

Competences of the Joint Undertaking

Competences of the Joint Undertaking

(Council Decision 2007/198/Euratom)

(Council Decision 2007/198/Euratom)

Objectives

Objectives

| — | to provide the contribution of the European Atomic Energy Community (Euratom) to the ITER International Fusion Energy Organisation, |
| --- | --- |

—

to provide the contribution of the European Atomic Energy Community (Euratom) to the ITER International Fusion Energy Organisation,

| — | to provide the contribution of Euratom to Broader Approach Activities with Japan for the rapid realisation of fusion energy, |
| --- | --- |

—

to provide the contribution of Euratom to Broader Approach Activities with Japan for the rapid realisation of fusion energy,

| — | to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility (IFMIF). |
| --- | --- |

—

to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility (IFMIF).

Tasks

Tasks

| — | oversee preparation of the ITER project site, |
| --- | --- |

—

oversee preparation of the ITER project site,

| — | provide components, equipment, materials and other resources to the ITER Organisation, |
| --- | --- |

—

provide components, equipment, materials and other resources to the ITER Organisation,

| — | manage procurement arrangements vis-à-vis the ITER Organisation and, in particular, associated quality assurance procedures, |
| --- | --- |

—

manage procurement arrangements vis-à-vis the ITER Organisation and, in particular, associated quality assurance procedures,

| — | prepare and coordinate Euratom's participation in the scientific and technical exploitation of the ITER Project, |
| --- | --- |

—

prepare and coordinate Euratom's participation in the scientific and technical exploitation of the ITER Project,

| — | coordinate scientific and technological research and development activities in support of Euratom's contribution to the ITER Organisation, |
| --- | --- |

—

coordinate scientific and technological research and development activities in support of Euratom's contribution to the ITER Organisation,

| — | provide Euratom's financial contribution to the ITER Organisation, |
| --- | --- |

—

provide Euratom's financial contribution to the ITER Organisation,

| — | arrange to make human resources available for the ITER Organisation, |
| --- | --- |

—

arrange to make human resources available for the ITER Organisation,

| — | interface with the ITER Organisation and carry out any other activities in furtherance of the ITER Agreement. |
| --- | --- |

—

interface with the ITER Organisation and carry out any other activities in furtherance of the ITER Agreement.

Governance

Governance

1 —   Governing Board

1 —

Governing Board

The Governing Board shall be responsible for the supervision of the Joint Undertaking in the pursuit of its objectives and ensure close collaboration between the Joint Undertaking and its Members in the implementation of its activities.

2 —   Executive Committee

2 —

Executive Committee

The Executive Committee shall assist the Governing Board in the preparation of its decisions and shall carry out any other tasks which the Governing Board may delegate to it.

3 —   Scientific Programme Board

3 —

Scientific Programme Board

The Scientific Programme Board shall advise the Governing Board and the Director, as necessary, on the adoption and implementation of the project plan and work programmes.

4 —   Director

4 —

Director

The Director shall be the chief executive officer responsible for the day-to-day management of the Joint Undertaking and shall be its legal representative.

5 —   External Audit

5 —

External Audit

Court of Auditors.

6 —   Internal Audit

6 —

Internal Audit

Established as of 1 July 2009.

7 —   Discharge Authority

7 —

Discharge Authority

The European Parliament, on a recommendation from the Council.

Resources available to the Joint Undertaking in 2010

Resources available to the Joint Undertaking in 2010

Budget

Budget

241,70 million euro, of which 93 % funded by Union contribution.

Staff at 31 December 2010

Staff at 31 December 2010

234 permanent posts provided for in the establishment plan, of which 185 posts were occupied.

Other staff:

| — | Seconded National Experts: 6 |
| --- | --- |

—

Seconded National Experts: 6

| — | Contract staff: 84 |
| --- | --- |

—

Contract staff: 84

| — | Local staff: n/a |
| --- | --- |

—

Local staff: n/a

| — | Total staff employed: 275 |
| --- | --- |

—

Total staff employed: 275

Allocated to (approximately):

| — | Operational activities: 160 |
| --- | --- |

—

Operational activities: 160

| — | Administrative tasks: 60 |
| --- | --- |

—

Administrative tasks: 60

| — | Mixed tasks: 55 |
| --- | --- |

—

Mixed tasks: 55

Activities and services provided in 2010

Activities and services provided in 2010

| — | Operational Contracts: 44 awarded for a total value of 826 million euro (42 launched), |
| --- | --- |

—

Operational Contracts: 44 awarded for a total value of 826 million euro (42 launched),

| — | Administrative Contracts: 7 awarded for a total value of 6 million euro (5 launched), |
| --- | --- |

—

Administrative Contracts: 7 awarded for a total value of 6 million euro (5 launched),

| — | Grants: 23 for a total value of 8 million euro (16 launched), |
| --- | --- |

—

Grants: 23 for a total value of 8 million euro (16 launched),

| — | Budget Implementation:






  — | 99,9 % in commitment appropriations (99,8 % operational and 99 % administrative), |
| --- | --- | --- |

—

Budget Implementation:

—

99,9 % in commitment appropriations (99,8 % operational and 99 % administrative),

| — | 63,4 % in payment appropriations (61,8 % operational and 77 % administrative), |
| --- | --- |

—

63,4 % in payment appropriations (61,8 % operational and 77 % administrative),

| — | Procurement Arrangements:






  — | 4 for the ITER project (384,44 kIUA (1) equivalent to 615 million euro) (total of 803,7 out of 1 135,9 kIUA or 66 % of all the European in-kind contributions planned), |
| --- | --- | --- |

—

Procurement Arrangements:

—

4 for the ITER project (384,44 kIUA (1) equivalent to 615 million euro) (total of 803,7 out of 1 135,9 kIUA or 66 % of all the European in-kind contributions planned),

1

| — | 5 for the Broader Approach Activities (98,4 kBAUA equivalent to 66 million euro out of a total of 236,4 kBAUA planned for all the European contributions), |
| --- | --- |

—

5 for the Broader Approach Activities (98,4 kBAUA equivalent to 66 million euro out of a total of 236,4 kBAUA planned for all the European contributions),

| — | ITER Credit Awarded: 10,4 kIUA (equivalent to 16,6 million euro). |
| --- | --- |

—

ITER Credit Awarded: 10,4 kIUA (equivalent to 16,6 million euro).

Source: Information supplied by the Joint Undertaking.

Source:

---

(1)  IUA: ITER unit of account.

1

---

REPLIES OF THE JOINT UNDERTAKING

Comments on the budgetary and financial management

Reorganisation of the Joint Undertaking and internal control systems

Paragraph 16, 17 and 18

Following the management change in February 2010, F4E initiated a major reorganisation in the second half of the same year which focussed on implementation of project based management and reinforcement of the internal control environment. As part of the reorganisation, and in response to the recommendations of the internal auditor's Financial Circuit audit, financial management was strengthened by the review of the financial circuits and the creation of a budget & finance unit in January 2011. At the same time, a financial circuit working group was established to document financial procedures, review controls and checklists and issue guidance notes improving the financial management system at F4E.

In parallel, an Internal Control Coordinator has been appointed to be responsible for the overall coordination of the control environment at F4E within the Budget and Finance Unit.

The reorganisation of F4E management has continued in a steady pace throughout 2011. Additional controls have been progressively introduced and vacant management functions have been filled. The new financial circuits have now been fully implemented, periodical management reporting has been established and management systems are becoming fully operational.

Taking into account the highly specialised industrial area in which F4E is active, the organisation also applies an ISO based quality assurance system which has been active since 2009. Following the need of the organisation, and in order to avoid duplication of effort, QA and IC will be merged into a wider F4E Management system.

IT systems

Paragraph 19

F4E is fully aware of the deficits in integrating financial and budgetary data with its operational activities. Among others, technical restrictions by the system owner regarding the access to financial data have led to delays in setting up management and reporting tools. This issue has recently been solved with an additional SLA with Budget DG.

Additionally, the complexity of the ITER project and subsequently the management of its underlying legal commitments, both administratively and operationally, have led to the delay in establishing one unique Contract Management System. At the preparation of the present replies, a central contract management system was in the process of being adopted by the management and an action plan is being prepared in order to redress encoding backlog and normalise the situation.

Other matters

Grants and procurement

Paragraph 20

F4E deems that the recommendation by the Court is indeed already implemented by the processes and publication strategy in place. It should be noted that in areas where the industry is less specialised F4E has received up to 33 offers in replies to its calls for tender, which clearly shows that the problem does not intrinsically belong to the communication and information methods used by F4E, but rather lies with the specialised nature of the industry as underlined by the Auditor himself. F4E cannot influence the level of expertise available in the market.

Paragraph 21

Technical Assessment Reports and Acceptance Notes are signed off and confirm that the costs charged are in compliance with the activities. In addition, financial checks are performed on the costs claimed. F4E does however agree that there is room for improvement as concerns the documentation of the checks performed. This is being addressed by the working group on the internal controls and the procedures are being strengthened.

Late payment of membership contributions

Paragraph 23

The statutes of F4E do not provide any other legal means to assure members pay their contribution on time, other than sending reminders. Following the recurrent delays in the payment of membership contributions, the issue was put on the agenda of the Governing Board at the end of May 2011.

Consequently, measures were approved for interest to be levied on Annual Membership Contribution in the event of late payment. Furthermore, a framework defining the modalities for the interest rates and debit notes was adopted and put in place.

Host State agreement

Paragraph 26

The Host Agreement signed between ‘Fusion and for Energy’ and the Kingdom of Spain in 2007 does indeed foresee that Spain will provide F4E with permanent premises no later than 3 years after the signature of the agreement. The Agreement also foresees that in the meantime, and before the final premises are made available, Spain will provide temporary premises. While Spain has not yet provided permanent premises, the Joint Undertaking occupies temporary premises free of cost, as Spain pays for the full cost of the premises (rent and maintenance as foreseen by the Host Agreement, while F4E pays for the tenant's part of the temporary premises). In recent discussions with the F4E Host State, we were informed that Spain is looking for a permanent solution which would normally be presented to F4E for acceptance before the end of 2011.

Meanwhile, it is important to mention that the current situation has no negative impact on the organisation.

Status of the financing of the ITER project

Paragraph 27, 28 and 29

In preparation of the ITER Council of July 2010, F4E assessed the feasibility of a revised ITER Baseline (the Baseline) which set the end of the construction phase at November 2019, as well as the resources needed for its implementation. For this purpose, F4E analysed the possible manufacturing paths and assessed the cost and risk implications. The Baseline was approved during the ITER Council meeting; the EU gave its support ‘ad referendum’, since the budgetary authority was still to approve and secure the financing of ITER.

F4E has carried out its ITER Activities during 2010 according to the Baseline. 95 % of the activities foreseen in F4E's 2010 Work Programme were initiated as planned. In cases where activities were delayed, action was taken to mitigate the delay and to maintain the schedule for first plasma.

F4E has continued to carry out its ITER Activities during 2011 according to the Baseline, and good progress has been made on many fronts. At the same time there have been delays on some key EU and non-EU items. In addition the impact of the East Japan earthquake in March has adversely affected the ITER schedule. As a consequence at the recent ITER Council in June, the IO was requested in particular by the EU to form a Special Task Group under the leadership of its Director-General in conjunction with all DAs, to identify mitigation plans for critical path items with a view to limiting these delays to a minimum while staying within the overall capped cost estimate.

Irrespective of this reoptimisation of the schedule, the requested additional funds for 2012 and 2013 will be used in particular to support the award of the very large contracts for the main ITER buildings which are still planned to be made in 2012 and 2013.

The 2012 and 2013 extra budget has been discussed in the meeting of the Budget Committee of the Council on 27 September with the Member States. The presidency is now aiming to present its draft proposal for a mandate to be discussed with the European Parliament at the budgetary trialogue of 19 October to reach an agreement before the ITER Council meeting mid-November which supposes to approve the new baseline.

---

| 16.12.2011 | EN | Official Journal of the European Union | C 368/32 |
| --- | --- | --- | --- |

16.12.2011

EN

Official Journal of the European Union

C 368/32

---

REPORT

on the annual accounts of the SESAR Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/05

INTRODUCTION

| 1. | The SESAR Joint Undertaking was set up in February 2007 (1), located in Brussels, in order to manage the activities of the SESAR (Single European Sky Air Traffic Management Research) project. |
| --- | --- |

1.

The SESAR Joint Undertaking was set up in February 2007 (1), located in Brussels, in order to manage the activities of the SESAR (Single European Sky Air Traffic Management Research) project.

| 2. | The SESAR project aims to modernise Air Traffic Management (ATM) in Europe and is divided into three phases:






  (a) | ‘Definition phase’ started in 2005 and led by the European Organisation for Safety of Air Navigation (Eurocontrol), with co-financing from the European Union (EU) budget through the Trans-European Network — Transport programme. The outcome is the European ATM Master Plan, which defines the content, the development and deployment plans of the next generation of ATM systems. |
| --- | --- | --- |

2.

The SESAR project aims to modernise Air Traffic Management (ATM) in Europe and is divided into three phases:

(a)

‘Definition phase’ started in 2005 and led by the European Organisation for Safety of Air Navigation (Eurocontrol), with co-financing from the European Union (EU) budget through the Trans-European Network — Transport programme. The outcome is the European ATM Master Plan, which defines the content, the development and deployment plans of the next generation of ATM systems.

| (b) | ‘Development phase’ (2008-2013) managed by the SESAR Joint Undertaking (2) and leading to the production of new technological systems, components and operational procedures as defined in the European ATM Master Plan. |
| --- | --- |

(b)

‘Development phase’ (2008-2013) managed by the SESAR Joint Undertaking (2) and leading to the production of new technological systems, components and operational procedures as defined in the European ATM Master Plan.

| (c) | ‘Deployment phase’ (2014-2020) to be led by industry and stakeholders, for the large-scale production and implementation of the new air traffic management infrastructure. |
| --- | --- |

(c)

‘Deployment phase’ (2014-2020) to be led by industry and stakeholders, for the large-scale production and implementation of the new air traffic management infrastructure.

| 3. | The Joint Undertaking is designed as a public-private partnership. The founding members are the European Union represented by the European Commission, and Eurocontrol represented by its Agency. Following a call for expressions of interest, 15 public and private enterprises from the air navigation industry are members of the Joint Undertaking. These include air navigation service providers, ground and aerospace manufacturing industry, aircraft manufacturers, airport authorities and airborne equipment manufacturers. |
| --- | --- |

3.

The Joint Undertaking is designed as a public-private partnership. The founding members are the European Union represented by the European Commission, and Eurocontrol represented by its Agency. Following a call for expressions of interest, 15 public and private enterprises from the air navigation industry are members of the Joint Undertaking. These include air navigation service providers, ground and aerospace manufacturing industry, aircraft manufacturers, airport authorities and airborne equipment manufacturers.

| 4. | The budget for the development phase of the SESAR project is 2,1 billion euro, to be provided in equal parts by the EU, by Eurocontrol and by the participating public and private partners. The EU contribution is funded from the Seventh Research Framework Programme and the Trans-European Networks — Transport programme. Around 90 % of the funding from Eurocontrol and the other stakeholders is in the form of in-kind contributions. |
| --- | --- |

4.

The budget for the development phase of the SESAR project is 2,1 billion euro, to be provided in equal parts by the EU, by Eurocontrol and by the participating public and private partners. The EU contribution is funded from the Seventh Research Framework Programme and the Trans-European Networks — Transport programme. Around 90 % of the funding from Eurocontrol and the other stakeholders is in the form of in-kind contributions.

| 5. | The SESAR JU started to work autonomously on 10 August 2007. |
| --- | --- |

5.

The SESAR JU started to work autonomously on 10 August 2007.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1), second paragraph of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (3) of the SESAR Joint Undertaking, which comprise the ‘financial statements’ (4) and the ‘reports on implementation of the budget’ (5) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

6.

Pursuant to the provisions of Article 287(1), second paragraph of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (3) of the SESAR Joint Undertaking, which comprise the ‘financial statements’ (4) and the ‘reports on implementation of the budget’ (5) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (6). |
| --- | --- |

7.

This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (6).

The Director's responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Joint Undertaking (7) under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (9) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
| --- | --- |

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Joint Undertaking (7) under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (9) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

The Court's responsibility

| 9. | The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
| --- | --- |

9.

The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (10) International Auditing Standards and Codes of Ethics. Those standards require that the Court complies with ethical requirements and plans and performs the audit to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular. |
| --- | --- |

10.

The Court conducted its audit in accordance with the IFAC and ISSAI (10) International Auditing Standards and Codes of Ethics. Those standards require that the Court complies with ethical requirements and plans and performs the audit to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court's audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and about the legality and the regularity of the transactions underlying them. The procedures selected depend on its audit judgement, including the assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error. In making those risk assessments internal control relevant to the entity's preparation and presentation of accounts is considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of accounting policies used and, the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
| --- | --- |

11.

The Court's audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and about the legality and the regularity of the transactions underlying them. The procedures selected depend on its audit judgement, including the assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error. In making those risk assessments internal control relevant to the entity's preparation and presentation of accounts is considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of accounting policies used and, the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
| --- | --- |

12.

The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 13. | In the Court's opinion, the SESAR Joint Undertaking's annual accounts present fairly, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation. |
| --- | --- |

13.

In the Court's opinion, the SESAR Joint Undertaking's annual accounts present fairly, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation.

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

| 14. | In the Court's opinion, the transactions underlying the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
| --- | --- |

14.

In the Court's opinion, the transactions underlying the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 15. | The comments which follow do not call the Court's opinions into question. |
| --- | --- |

15.

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

BUDGETARY AND FINANCIAL MANAGEMENT

| 16. | The final 2010 budget adopted by the Administrative Board included commitment appropriations of 135 million euro and payment appropriations of 143 million euro. The utilisation rates for commitment and payment appropriations were 97,3 % and 82,2 % respectively. |
| --- | --- |

16.

The final 2010 budget adopted by the Administrative Board included commitment appropriations of 135 million euro and payment appropriations of 143 million euro. The utilisation rates for commitment and payment appropriations were 97,3 % and 82,2 % respectively.

| 17. | In 2010, the contributions from members (55,6 million euro) together with the outturn of the previous year (86,5 million euro) amounted to 142,1 million euro, against payments of 84,9 million euro and the carryover of appropriations of 3,7 million euro. This led to a positive budget outturn of 53,5 million euro and deposits in bank accounts at the end of the year totalling 57,2 million euro. This is at odds with the budgetary principle of equilibrium. |
| --- | --- |

17.

In 2010, the contributions from members (55,6 million euro) together with the outturn of the previous year (86,5 million euro) amounted to 142,1 million euro, against payments of 84,9 million euro and the carryover of appropriations of 3,7 million euro. This led to a positive budget outturn of 53,5 million euro and deposits in bank accounts at the end of the year totalling 57,2 million euro. This is at odds with the budgetary principle of equilibrium.

| 18. | According to Article 6 of the SESAR Joint Undertaking Financial Rules, no expenditure may be committed or authorised in excess of the appropriations authorised by the budget. For two budget headings — administrative expenditure and studies and development — authorised expenditure exceeded budgetary appropriations by 11 % and 9 % respectively. |
| --- | --- |

18.

According to Article 6 of the SESAR Joint Undertaking Financial Rules, no expenditure may be committed or authorised in excess of the appropriations authorised by the budget. For two budget headings — administrative expenditure and studies and development — authorised expenditure exceeded budgetary appropriations by 11 % and 9 % respectively.

OTHER MATTERS

Internal control systems

| 19. | In 2010, the Joint Undertaking began to use the financial reporting systems also used by the Commission (ABAC and SAP). However, the SESAR Joint Undertaking operational programme management system is not integrated into these financial reporting systems. At the end of 2010, the underlying business processes had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking. |
| --- | --- |

19.

In 2010, the Joint Undertaking began to use the financial reporting systems also used by the Commission (ABAC and SAP). However, the SESAR Joint Undertaking operational programme management system is not integrated into these financial reporting systems. At the end of 2010, the underlying business processes had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking.

Late payment of membership contributions

| 20. | The deadline of 1 July 2010 for payment to the Joint Undertaking of the cash contributions for the year from its members was not respected. Delays in payment ranged from 12 to 113 days. Two members had paid no contribution at all by the end of 2010. |
| --- | --- |

20.

The deadline of 1 July 2010 for payment to the Joint Undertaking of the cash contributions for the year from its members was not respected. Delays in payment ranged from 12 to 113 days. Two members had paid no contribution at all by the end of 2010.

Internal Audit Function and Commission Internal Audit Service

| 21. | In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission's internal auditor. While the Statutes have not been amended, the Court notes that the Commission and the Joint Undertaking have taken action to ensure a clearer definition of the respective operational roles of the Commission's Internal Audit Service (IAS) and of the internal auditing function of the Joint Undertaking. |
| --- | --- |

21.

In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission's internal auditor. While the Statutes have not been amended, the Court notes that the Commission and the Joint Undertaking have taken action to ensure a clearer definition of the respective operational roles of the Commission's Internal Audit Service (IAS) and of the internal auditing function of the Joint Undertaking.

| 22. | In line with the views expressed by the Court, the Director-General of the IAS has confirmed in a note to all EU Joint Undertakings the responsibilities of the IAS under the general Financial Regulation to act as Internal Auditor of the Joint Undertakings. The Administrative Board of the SESAR Joint Undertaking has modified the charter of its internal auditing function accordingly. |
| --- | --- |

22.

In line with the views expressed by the Court, the Director-General of the IAS has confirmed in a note to all EU Joint Undertakings the responsibilities of the IAS under the general Financial Regulation to act as Internal Auditor of the Joint Undertakings. The Administrative Board of the SESAR Joint Undertaking has modified the charter of its internal auditing function accordingly.

This report was adopted by Chamber II, headed by Mr Harald NOACK, Member of the Court of Auditors, in Luxembourg at its meeting of 12 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Council Regulation (EC) No 219/2007 on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR) (OJ L 64, 2.3.2007, p. 1) amended by Regulation (EC) No 1361/2008 (OJ L 352, 31.12.2008, p. 12).

1

(2)  The Annex summarises the Joint Undertaking's competences and activities. It is presented for information purposes.

2

Annex

(3)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives inter alia an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

3

(4)  The financial statements include the balance sheet and the economic outturn account, the cash-flow table, the statement of changes in capital and the annex to the financial statements which includes the description of the significant accounting policies and other explanatory information.

4

(5)  The budget implementation reports comprise the budget outturn account and its annex.

5

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

6

(7)  SESAR Financial Rules adopted by the Administrative Board on 28 July 2009.

7

(8)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

8

(9)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Commission Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.07.2008, p. 23) and are incorporated in the Financial Rules of the SESAR Joint Undertaking.

9

(10)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

10

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ANNEX

SESAR Joint Undertaking (Brussels)

Competences and activities

| Areas of EU competence deriving from the Treaty


  (Article 187) | Research and technological development and space.
  Efficient execution of EU research, technological development and demonstration programmes. |
| --- | --- |
| Competences of the Joint Undertaking

  (Council Regulation (EC) 219/2007, as last modified by Council Regulation (EC) 1361/2008) | Main objectives

  The aim of the SESAR Joint Undertaking shall be to ensure the modernisation of the European air traffic management system by coordinating and concentrating all relevant research and development efforts in the EU. It shall be responsible for the execution of the ATM Master Plan and in particular for carrying out the following tasks:






  — | organising and coordinating the activities of the development phase of the SESAR project, in accordance with the ATM Master Plan, resulting from the definition phase of the project managed by Eurocontrol, by combining and managing under a single structure public and private sector funding, |

Areas of EU competence deriving from the Treaty

(Article 187)

Research and technological development and space.

Efficient execution of EU research, technological development and demonstration programmes.

Competences of the Joint Undertaking

(Council Regulation (EC) 219/2007, as last modified by Council Regulation (EC) 1361/2008)

Main objectives

The aim of the SESAR Joint Undertaking shall be to ensure the modernisation of the European air traffic management system by coordinating and concentrating all relevant research and development efforts in the EU. It shall be responsible for the execution of the ATM Master Plan and in particular for carrying out the following tasks:

—

organising and coordinating the activities of the development phase of the SESAR project, in accordance with the ATM Master Plan, resulting from the definition phase of the project managed by Eurocontrol, by combining and managing under a single structure public and private sector funding,

| — | ensuring the necessary funding for the activities of the development phase of the SESAR project in accordance with the ATM Master Plan, |
| --- | --- |

—

ensuring the necessary funding for the activities of the development phase of the SESAR project in accordance with the ATM Master Plan,

| — | ensuring the involvement of the stakeholders of the air traffic management sector in Europe, in particular: air navigation service providers, airspace users, professional staff associations, airports, and manufacturing industry; as well as the relevant scientific institutions or the relevant scientific community, |
| --- | --- |

—

ensuring the involvement of the stakeholders of the air traffic management sector in Europe, in particular: air navigation service providers, airspace users, professional staff associations, airports, and manufacturing industry; as well as the relevant scientific institutions or the relevant scientific community,

| — | organising the technical work of research and development, validation and study, to be carried out under its authority while avoiding fragmentation of such activities, |
| --- | --- |

—

organising the technical work of research and development, validation and study, to be carried out under its authority while avoiding fragmentation of such activities,

| — | ensuring the supervision of activities related to the development of common products duly identified in the ATM Master Plan and if necessary, to organise specific invitations to tender. |
| --- | --- |

—

ensuring the supervision of activities related to the development of common products duly identified in the ATM Master Plan and if necessary, to organise specific invitations to tender.

Governance

1 —   Administrative Board

The Administrative Board is responsible for:

| (a) | adopting the ATM Master Plan endorsed by the Council as referred to in Article 1(2) of this Regulation and approving any proposal to modify it; |
| --- | --- |

(a)

adopting the ATM Master Plan endorsed by the Council as referred to in Article 1(2) of this Regulation and approving any proposal to modify it;

| (b) | giving guidelines and taking the decisions necessary for the implementation of the development phase of the SESAR project and exercising overall control over its implementation; |
| --- | --- |

(b)

giving guidelines and taking the decisions necessary for the implementation of the development phase of the SESAR project and exercising overall control over its implementation;

| (c) | approving the Joint Undertaking’s work programme and annual work programmes referred to in Article 16(1) as well as the annual budget, including the staff establishment plan; |
| --- | --- |

(c)

approving the Joint Undertaking’s work programme and annual work programmes referred to in Article 16(1) as well as the annual budget, including the staff establishment plan;

| (d) | authorising negotiations and deciding on the accession of new members and on the relating agreements as referred to in Article 1(3); |
| --- | --- |

(d)

authorising negotiations and deciding on the accession of new members and on the relating agreements as referred to in Article 1(3);

| (e) | supervising the execution of the agreements between members and the Joint Undertaking; |
| --- | --- |

(e)

supervising the execution of the agreements between members and the Joint Undertaking;

| (f) | appointing and dismissing the Executive Director and approving the organisation chart and monitoring the Executive Director’s performance; |
| --- | --- |

(f)

appointing and dismissing the Executive Director and approving the organisation chart and monitoring the Executive Director’s performance;

| (g) | deciding on the amounts and procedures for the payment of members’ financial contributions and the assessment of contributions in kind; |
| --- | --- |

(g)

deciding on the amounts and procedures for the payment of members’ financial contributions and the assessment of contributions in kind;

| (h) | adopting the financial rules of the Joint Undertaking; |
| --- | --- |

(h)

adopting the financial rules of the Joint Undertaking;

| (i) | approving the annual accounts and balance sheet; |
| --- | --- |

(i)

approving the annual accounts and balance sheet;

| (j) | adopting the annual report on the progress of the development phase of the SESAR project and its financial situation referred to in Article 16(2); |
| --- | --- |

(j)

adopting the annual report on the progress of the development phase of the SESAR project and its financial situation referred to in Article 16(2);

| (k) | deciding on proposals to the Commission on the extension and the dissolution of the Joint Undertaking; |
| --- | --- |

(k)

deciding on proposals to the Commission on the extension and the dissolution of the Joint Undertaking;

| (l) | establishing procedures for granting rights of access to tangible and intangible assets which are the property of the Joint Undertaking and the transfer of such assets; |
| --- | --- |

(l)

establishing procedures for granting rights of access to tangible and intangible assets which are the property of the Joint Undertaking and the transfer of such assets;

| (m) | laying down the rules and procedures for awarding the contracts necessary to implement the ATM Master Plan, including specific procedures for conflicts of interest; |
| --- | --- |

(m)

laying down the rules and procedures for awarding the contracts necessary to implement the ATM Master Plan, including specific procedures for conflicts of interest;

| (n) | deciding on proposals to the Commission to amend the Statutes in accordance with Article 24; |
| --- | --- |

(n)

deciding on proposals to the Commission to amend the Statutes in accordance with Article 24;

| (o) | exercising such other powers and performing such other functions, including the establishment of subsidiary bodies, as may be necessary for the purposes of the development phase of the SESAR project; |
| --- | --- |

(o)

exercising such other powers and performing such other functions, including the establishment of subsidiary bodies, as may be necessary for the purposes of the development phase of the SESAR project;

| (p) | adopting the arrangements for implementing Article 8. |
| --- | --- |

(p)

adopting the arrangements for implementing Article 8.

2 —   Executive Director

The Executive Director shall perform his duties with complete independence within the powers assigned to him.

The Executive Director shall direct the execution of the SESAR project within the guidelines established by the Administrative Board to which he shall be responsible. He shall provide the Administrative Board with all information necessary for the performance of its functions.

The Executive Director has to:

| (a) | employ, manage and supervise the staff of the Joint Undertaking, including the staff referred to in Article 8; |
| --- | --- |

(a)

employ, manage and supervise the staff of the Joint Undertaking, including the staff referred to in Article 8;

| (b) | organise, manage and supervise the activities of the Joint Undertaking; |
| --- | --- |

(b)

organise, manage and supervise the activities of the Joint Undertaking;

| (c) | submit to the Administrative Board his proposals concerning the organisation chart; |
| --- | --- |

(c)

submit to the Administrative Board his proposals concerning the organisation chart;

| (d) | draw up and regularly update the global and the annual work programme of the Joint Undertaking, including an estimate on programme costs, and submit them to the Administrative Board; |
| --- | --- |

(d)

draw up and regularly update the global and the annual work programme of the Joint Undertaking, including an estimate on programme costs, and submit them to the Administrative Board;

| (e) | draw up, in accordance with the Financial Rules, the draft annual budget, including the staff establishment plan, and submit them to the Administrative Board; |
| --- | --- |

(e)

draw up, in accordance with the Financial Rules, the draft annual budget, including the staff establishment plan, and submit them to the Administrative Board;

| (f) | ensure that the obligations of the Joint Undertaking, with regard to the contracts and agreements it concludes, are met; |
| --- | --- |

(f)

ensure that the obligations of the Joint Undertaking, with regard to the contracts and agreements it concludes, are met;

| (g) | ensure that the activities of the Joint Undertaking are carried out with complete independence and without any conflicts of interest; |
| --- | --- |

(g)

ensure that the activities of the Joint Undertaking are carried out with complete independence and without any conflicts of interest;

| (h) | draw up the annual report on the progress of the SESAR project and its financial situation, and such other reports as may be requested by the Administrative Board, and submit them to the latter; |
| --- | --- |

(h)

draw up the annual report on the progress of the SESAR project and its financial situation, and such other reports as may be requested by the Administrative Board, and submit them to the latter;

| (i) | submit the annual accounts and balance sheet to the Administrative Board; |
| --- | --- |

(i)

submit the annual accounts and balance sheet to the Administrative Board;

| (j) | submit to the Administrative Board any proposal involving changes in the design of the SESAR project. |
| --- | --- |

(j)

submit to the Administrative Board any proposal involving changes in the design of the SESAR project.

3 —   Internal Audit

Internal Auditor of the European Commission.

4 —   External audit

European Court of Auditors.

5 —   Discharge authority

European Parliament, Council and the Administrative Board of the SJU.

Resources made available to the Joint Undertaking in 2010 (2009)

Budget

134,7 million euro

(325,1 million euro)

Staff at 31 December 2010

The 2010 operating budget provides for an establishment plan of 39 Temporary Agents and 3 Seconded National Experts (SNE), leading to a total of 42 staff posts, out of which 37 were occupied at year end 2010 (18 in 2009):

| — | 23 temporary staff, recruited externally |
| --- | --- |

—

23 temporary staff, recruited externally

| — | 10 staff seconded by SJU Members in accordance with Article 8 of Council Regulation (EC) 219/2007 |
| --- | --- |

—

10 staff seconded by SJU Members in accordance with Article 8 of Council Regulation (EC) 219/2007

| — | 2 contractual staff |
| --- | --- |

—

2 contractual staff

| — | 2 SNEs |
| --- | --- |

—

2 SNEs

Allocated to

| — | Operational tasks: 21 |
| --- | --- |

—

Operational tasks: 21

| — | Administrative and support tasks: 15 |
| --- | --- |

—

Administrative and support tasks: 15

| — | Mixed tasks: 1. |
| --- | --- |

—

Mixed tasks: 1.

Products and services 2010

Following the launch of the SESAR Programme activities in June 2009:

| (a) | At the end of 2010, 285 projects were initiated and 232 entered the execution phase; the integration of activities awarded as part of IBAFO II is underway and around 1 800 persons are currently involved in the different projects of the SESAR Programme. The Programme activities are developing as planned and constitute a basis to be further progressed to contribute to the achievement of the 2012 strategic objectives. |
| --- | --- |

(a)

At the end of 2010, 285 projects were initiated and 232 entered the execution phase; the integration of activities awarded as part of IBAFO II is underway and around 1 800 persons are currently involved in the different projects of the SESAR Programme. The Programme activities are developing as planned and constitute a basis to be further progressed to contribute to the achievement of the 2012 strategic objectives.

| (b) | In June 2010, the first Engineering Review Session, i.e. the assessment of the progress of the different Work Packages/Projects towards the SESAR Joint Undertaking Targets, was performed. In particular, the review highlighted how the critical dependencies have been established and contribute to the coherent progressing of the projects towards the Targets as well as the need for some corrective actions to align schedules, content, and engineering methodology. |
| --- | --- |

(b)

In June 2010, the first Engineering Review Session, i.e. the assessment of the progress of the different Work Packages/Projects towards the SESAR Joint Undertaking Targets, was performed. In particular, the review highlighted how the critical dependencies have been established and contribute to the coherent progressing of the projects towards the Targets as well as the need for some corrective actions to align schedules, content, and engineering methodology.

| (c) | With regard to the Programme reporting, the Joint Undertaking has introduced a structured quarterly reporting based on effort consumption that has to be submitted by the Members, starting with quarter III 2010. This report provides the Joint Undertaking with an additional monitoring of the alignment of the Members’ efforts with the programme objectives, and of the risk incurred. |
| --- | --- |

(c)

With regard to the Programme reporting, the Joint Undertaking has introduced a structured quarterly reporting based on effort consumption that has to be submitted by the Members, starting with quarter III 2010. This report provides the Joint Undertaking with an additional monitoring of the alignment of the Members’ efforts with the programme objectives, and of the risk incurred.

| (d) | With regard to Validation, SESAR partners agreed on a Validation & Verification roadmap, which in particular stresses the importance of being as close as possible to the real operational environment in all validation activities. |
| --- | --- |

(d)

With regard to Validation, SESAR partners agreed on a Validation & Verification roadmap, which in particular stresses the importance of being as close as possible to the real operational environment in all validation activities.

| (e) | Work Package E (Long Term Research) and Work Package 11 (Flight Operations Centre Systems) have been launched and activities started fully respectively by year end and by the first quarter 2011. |
| --- | --- |

(e)

Work Package E (Long Term Research) and Work Package 11 (Flight Operations Centre Systems) have been launched and activities started fully respectively by year end and by the first quarter 2011.

| (f) | In order to ensure the involvement of all stakeholders in the Programme, the SJU has assured their participation through the award of contracts as a result of procurement procedures, directly or through Eurocontrol:






  — | During the first months of 2010 a contract was signed to add ‘low cost airspace users’ expertise. The amount committed during 2010 is 1,5 million euro. |
| --- | --- | --- |

(f)

In order to ensure the involvement of all stakeholders in the Programme, the SJU has assured their participation through the award of contracts as a result of procurement procedures, directly or through Eurocontrol:

—

During the first months of 2010 a contract was signed to add ‘low cost airspace users’ expertise. The amount committed during 2010 is 1,5 million euro.

| — | With regard to the involvement of the military, more and more contacts are developed with the different National Defence administrations and through Eurocontrol DCMAC. The recruitment of a Senior Military Advisor in May 2010 has substantially increased the awareness of SESAR within the military community. |
| --- | --- |

—

With regard to the involvement of the military, more and more contacts are developed with the different National Defence administrations and through Eurocontrol DCMAC. The recruitment of a Senior Military Advisor in May 2010 has substantially increased the awareness of SESAR within the military community.

| — | The involvement of the Professional Staff Associations has been assured through the signature by Eurocontrol on behalf of the Joint Undertaking of 5 contracts with each of the associations. The amount committed for the period 2010 to 2012 is 1 million euro as cash contribution of Eurocontrol. The administration and payments are managed by Eurocontrol, once the deliverables are approved by the Joint Undertaking. |
| --- | --- |

—

The involvement of the Professional Staff Associations has been assured through the signature by Eurocontrol on behalf of the Joint Undertaking of 5 contracts with each of the associations. The amount committed for the period 2010 to 2012 is 1 million euro as cash contribution of Eurocontrol. The administration and payments are managed by Eurocontrol, once the deliverables are approved by the Joint Undertaking.

| (g) | The second phase of AIRE (Atlantic Interoperability Initiative to Reduce Emissions) procurement procedure was launched and completed, resulting in the award of 18 contracts with different consortia in charge of the performance of the activities. The total amount committed is 2,7 million euro. |
| --- | --- |

(g)

The second phase of AIRE (Atlantic Interoperability Initiative to Reduce Emissions) procurement procedure was launched and completed, resulting in the award of 18 contracts with different consortia in charge of the performance of the activities. The total amount committed is 2,7 million euro.

| (h) | A study on wireless communication was launched by the Joint Undertaking in May 2010 and 2 contracts for an amount of 0,5 million euro were signed. |
| --- | --- |

(h)

A study on wireless communication was launched by the Joint Undertaking in May 2010 and 2 contracts for an amount of 0,5 million euro were signed.

| (i) | Following the signature of a Memorandum of Cooperation between the EU and the US Federal Aviation Administration, the Joint Undertaking in cooperation with the European Commission and Eurocontrol will establish the most appropriate framework to implement this memorandum in concrete activities. In this respect, it is the intention of the Joint Undertaking to ensure that its Members involved operationally in projects are focal points with their American counterparts in the different relevant domains. Furthermore, external relation in cooperation with the EC and Eurocontrol were established with different strategic areas around the world, in particular Brazil, China, India and the Middle East. |
| --- | --- |

(i)

Following the signature of a Memorandum of Cooperation between the EU and the US Federal Aviation Administration, the Joint Undertaking in cooperation with the European Commission and Eurocontrol will establish the most appropriate framework to implement this memorandum in concrete activities. In this respect, it is the intention of the Joint Undertaking to ensure that its Members involved operationally in projects are focal points with their American counterparts in the different relevant domains. Furthermore, external relation in cooperation with the EC and Eurocontrol were established with different strategic areas around the world, in particular Brazil, China, India and the Middle East.

| (j) | The communication plan has been implemented in accordance with the Budget approved by the Administrative Board. Within the activities performed by the Communication team, the annual Amsterdam Global Air Traffic Control conference in March constitutes an example of efficient and effective results within contained resources. |
| --- | --- |

(j)

The communication plan has been implemented in accordance with the Budget approved by the Administrative Board. Within the activities performed by the Communication team, the annual Amsterdam Global Air Traffic Control conference in March constitutes an example of efficient and effective results within contained resources.

| (k) | The implementation of ABAC and SAP was completed in May 2010, while ABAC Assets and ABAC Contract are planned to be implemented by the end of 2011. |
| --- | --- |

(k)

The implementation of ABAC and SAP was completed in May 2010, while ABAC Assets and ABAC Contract are planned to be implemented by the end of 2011.

Source: Information supplied by the SESAR Joint Undertaking.

---

REPLIES OF THE SESAR JOINT UNDERTAKING

| 17. | The SJU considers that it has clearly progressed in respect of the budgetary principle of equilibrium. The 2010 end of year cash balance of 57,2 million euro is a decrease of 34 % compared to 2009. Of the 55,6 million euro of contributions from members, 43,8 million euro was received in the last weeks of the year, to ensure the funding of operations in 2011. |
| --- | --- |

17.

The SJU considers that it has clearly progressed in respect of the budgetary principle of equilibrium. The 2010 end of year cash balance of 57,2 million euro is a decrease of 34 % compared to 2009. Of the 55,6 million euro of contributions from members, 43,8 million euro was received in the last weeks of the year, to ensure the funding of operations in 2011.

| 18. | The SJU acknowledges the comment of the Court but the SJU has a limited lifetime, and considers that it can only enter the total payment appropriations once into the overall budget for 2007-2016, in order to avoid exceeding the total budget ceiling by the end of the SESAR development phase in 2016. |
| --- | --- |

18.

The SJU acknowledges the comment of the Court but the SJU has a limited lifetime, and considers that it can only enter the total payment appropriations once into the overall budget for 2007-2016, in order to avoid exceeding the total budget ceiling by the end of the SESAR development phase in 2016.

| 19. | The SJU has developed an operational programme management system that complements the financial and budgetary information and considers that it has integrated its systems as far as possible, given the constraints on its use of ABAC and SAP. The SJU is planning to implement ABAC Assets and ABAC Contract by the end of 2011. The report of the Accounting Officer of the SJU on the validation of the local systems will be finalised in 2011. |
| --- | --- |

19.

The SJU has developed an operational programme management system that complements the financial and budgetary information and considers that it has integrated its systems as far as possible, given the constraints on its use of ABAC and SAP. The SJU is planning to implement ABAC Assets and ABAC Contract by the end of 2011. The report of the Accounting Officer of the SJU on the validation of the local systems will be finalised in 2011.

| 20. | The total contributions due from the two Members who had not paid by the end of 2010 amount to 18 000 euro. The delay was due to a miscommunication within the consortium of Members. These contributions were received at the beginning of 2011. |
| --- | --- |

20.

The total contributions due from the two Members who had not paid by the end of 2010 amount to 18 000 euro. The delay was due to a miscommunication within the consortium of Members. These contributions were received at the beginning of 2011.

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| 16.12.2011 | EN | Official Journal of the European Union | C 368/40 |
| --- | --- | --- | --- |

16.12.2011

EN

Official Journal of the European Union

C 368/40

---

REPORT

on the annual accounts of the Fuel Cells and Hydrogen Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/06

INTRODUCTION

| 1. | The Fuel Cells and Hydrogen Joint Undertaking (FCH Joint Undertaking) located in Brussels, was set up in May 2008 (1) for the period up to 31 December 2017. |
| --- | --- |

1.

The Fuel Cells and Hydrogen Joint Undertaking (FCH Joint Undertaking) located in Brussels, was set up in May 2008 (1) for the period up to 31 December 2017.

| 2. | The objectives of the FCH JU include supporting research, technological development and demonstration activities in the Member States and countries associated with the Seventh Framework Programme (2) in a coordinated manner together with industry and research organisations in order to focus on developing market applications and hence facilitating additional industrial efforts towards a rapid deployment of fuel cells and hydrogen technologies. (3) |
| --- | --- |

2.

The objectives of the FCH JU include supporting research, technological development and demonstration activities in the Member States and countries associated with the Seventh Framework Programme (2) in a coordinated manner together with industry and research organisations in order to focus on developing market applications and hence facilitating additional industrial efforts towards a rapid deployment of fuel cells and hydrogen technologies. (3)

| 3. | The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, and the European Fuel Cell and Hydrogen Joint Technology Initiative Industry Grouping (Industry Grouping). |
| --- | --- |

3.

The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, and the European Fuel Cell and Hydrogen Joint Technology Initiative Industry Grouping (Industry Grouping).

| 4. | The maximum EU contribution to the FCH Joint Undertaking to cover running costs and research activities is 470 million euro financed from the budget of the Seventh Framework Programme, of which the proportion earmarked for running costs must not exceed 20 million euro. The Industry Grouping should contribute 50 % of the running costs (up to a maximum of 10 million euro) and should contribute to the funding of research activities through in-kind (4) contributions at least equal to the EU financial contribution. |
| --- | --- |

4.

The maximum EU contribution to the FCH Joint Undertaking to cover running costs and research activities is 470 million euro financed from the budget of the Seventh Framework Programme, of which the proportion earmarked for running costs must not exceed 20 million euro. The Industry Grouping should contribute 50 % of the running costs (up to a maximum of 10 million euro) and should contribute to the funding of research activities through in-kind (4) contributions at least equal to the EU financial contribution.

| 5. | The Joint Undertaking was granted its financial autonomy on 15 November 2010. |
| --- | --- |

5.

The Joint Undertaking was granted its financial autonomy on 15 November 2010.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (5) of the Fuel Cells and Hydrogen Joint Undertaking, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (5) of the Fuel Cells and Hydrogen Joint Undertaking, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (8). |
| --- | --- |

7.

This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (8).

The Director’s responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules, under his own responsibility and within the limits of the authorised appropriations (9). The Director is responsible for putting in place (10) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (11) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
| --- | --- |

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking’s financial rules, under his own responsibility and within the limits of the authorised appropriations (9). The Director is responsible for putting in place (10) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (11) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

The Court’s responsibility

| 9. | The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the Joint Undertaking’s annual accounts and the legality and regularity of the transactions underlying them. |
| --- | --- |

9.

The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the Joint Undertaking’s annual accounts and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (12) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical and professional requirements and to plan and perform the audit so as to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular. |
| --- | --- |

10.

The Court conducted its audit in accordance with the IFAC and ISSAI (12) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical and professional requirements and to plan and perform the audit so as to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
| --- | --- |

11.

The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
| --- | --- |

12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

| 13. | In the Court’s opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules. |
| --- | --- |

13.

In the Court’s opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

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

| 14. | In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the year ended 31 December 2010 are, in all material respects, legal and regular. |
| --- | --- |

14.

In the Court’s opinion, the transactions underlying the annual accounts of the Joint Undertaking for the year ended 31 December 2010 are, in all material respects, legal and regular.

| 15. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

15.

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

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Delayed financial autonomy

| 16. | The Court is of the view that the period of 28 months from the date the Council Regulation came into force to the date of the actual financial autonomy on 15 November 2010 is excessive. As a result of the delayed financial autonomy, all the 2010 operational payments to beneficiaries were made during the last 6 weeks of 2010. |
| --- | --- |

16.

The Court is of the view that the period of 28 months from the date the Council Regulation came into force to the date of the actual financial autonomy on 15 November 2010 is excessive. As a result of the delayed financial autonomy, all the 2010 operational payments to beneficiaries were made during the last 6 weeks of 2010.

Internal Control Systems

| 17. | At the end of 2010, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Joint Undertaking’s financial rules. |
| --- | --- |

17.

At the end of 2010, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Joint Undertaking’s financial rules.

| 18. | The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (13). |
| --- | --- |

18.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (13).

Methodology for evaluating contributions in kind

| 19. | The methodology for evaluating contributions in kind has not yet been developed (14). The FCH Joint Undertaking is committed to developing such a methodology in the course of 2011 in order to be in a position to validate cost claims. |
| --- | --- |

19.

The methodology for evaluating contributions in kind has not yet been developed (14). The FCH Joint Undertaking is committed to developing such a methodology in the course of 2011 in order to be in a position to validate cost claims.

OTHER MATTERS

Internal audit function and the Commission’s Internal Audit Service

| 20. | The Court points out the need to amend the Joint Undertaking’s financial rules to include the provision referring to the powers of the Commission’s internal auditor in the Commission Framework Regulation applicable to the Joint Undertakings (15). The Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined. |
| --- | --- |

20.

The Court points out the need to amend the Joint Undertaking’s financial rules to include the provision referring to the powers of the Commission’s internal auditor in the Commission Framework Regulation applicable to the Joint Undertakings (15). The Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined.

Lack of host State agreement

| 21. | Under the terms of the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed. |
| --- | --- |

21.

Under the terms of the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Council Regulation (EC) No 521/2008 of 30 May 2008 setting up the Fuel Cells and Hydrogen Joint Undertaking (OJ L 153, 12.6.2008, p. 1).

1

(2)  The Seventh Framework Programme, adopted by Decision No 1982/2006/EC of the European Parliament and of the Council (OJ L 412, 30.12.2006, p. 1), brings all the research-related EU initiatives together under one roof and plays a crucial role in achieving the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.

2

(3)  The Annex summarises the Joint Undertaking’s competences, activities and available resources. It is presented for information purposes.

3

Annex

(4)  According to Article 12(3) of the Annex to the Council Regulation setting up the Joint Undertaking which stipulates that the ‘operational costs of the FCH Joint Undertaking shall be covered through the financial contribution of the Community, and through in-kind contributions from the legal entities participating in the activities.’

4

(5)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

5

(6)  The ‘financial statements’ include the balance sheet and the economic outturn account, the cash-flow statement, the statement of changes in net assets and the notes to the financial statements which include a description of the accounting policies and other explanatory information.

6

(7)  The budget implementation reports comprise the budget outturn account, its reconciliation with the economic outturn account and a report on the budget execution in 2010.

7

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

8

(9)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

9

(10)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

10

(11)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are incorporated in the financial rules of the FCH Joint Undertaking.

11

(12)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

12

(13)  Namely: (a) incomplete strategic IT planning cycle; (b) lack of proper data classification according to confidentiality and integrity requirements; and (c) lack of formal Business Continuity Plan (BCP) and complete and tested Disaster Recovery Plan (DRP).

13

(14)  Article 12 (7)of the Annex to the Council Regulation setting up the Joint Undertaking stipulates that ‘the methodology for evaluating contributions in kind shall be defined by the FCH Joint Undertaking in compliance with its financial rules and based on the Rules for Participation of the Seventh Framework Programme.’

14

(15)  Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the Framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities.

15

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ANNEX

Fuel Cells and Hydrogen Joint Undertaking

Competences and activities

| Areas of Union competence deriving from the Treaty | Extracts from Articles 187 and 188 of the Treaty on the Functioning of the European Union
  Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme – provides for a Union contribution to the establishment of long-term public-private partnerships in the form of Joint Technology Initiatives which could be implemented through Joint Undertakings within the meaning of Article 187 of the TFEU |
| --- | --- |
| Competences of the Joint Undertaking


  (Council Regulation (EC) No 521/2008) | Objectives

  The Fuel Cells and Hydrogen Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Specific Programme ‘Cooperation’ themes for ‘Energy’, ‘Nanosciences, Nanotechnologies, Materials and New Production Technologies’, ‘Environment (including Climate Change)’, and ‘Transport (including Aeronautics)’.
  It shall in particular:






  — | aim at placing Europe at the forefront of fuel cell and hydrogen technologies worldwide and at enabling the market breakthrough of fuel cell and hydrogen technologies, thereby allowing commercial market forces to drive the substantial potential public benefits, |

Areas of Union competence deriving from the Treaty

Extracts from Articles 187 and 188 of the Treaty on the Functioning of the European Union

Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme – provides for a Union contribution to the establishment of long-term public-private partnerships in the form of Joint Technology Initiatives which could be implemented through Joint Undertakings within the meaning of Article 187 of the TFEU

Competences of the Joint Undertaking

(Council Regulation (EC) No 521/2008)

Objectives

The Fuel Cells and Hydrogen Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Specific Programme ‘Cooperation’ themes for ‘Energy’, ‘Nanosciences, Nanotechnologies, Materials and New Production Technologies’, ‘Environment (including Climate Change)’, and ‘Transport (including Aeronautics)’.

It shall in particular:

—

aim at placing Europe at the forefront of fuel cell and hydrogen technologies worldwide and at enabling the market breakthrough of fuel cell and hydrogen technologies, thereby allowing commercial market forces to drive the substantial potential public benefits,

| — | support Research, Technological development and Demonstration (hereinafter referred to as RTD) in the Member States and countries associated with the Seventh Framework Programme (hereinafter referred to as Associated countries) in a coordinated manner to overcome the market failure and focus on developing market applications and thereby facilitate additional industrial efforts towards a rapid deployment of fuel cells and hydrogen technologies, |
| --- | --- |

—

support Research, Technological development and Demonstration (hereinafter referred to as RTD) in the Member States and countries associated with the Seventh Framework Programme (hereinafter referred to as Associated countries) in a coordinated manner to overcome the market failure and focus on developing market applications and thereby facilitate additional industrial efforts towards a rapid deployment of fuel cells and hydrogen technologies,

| — | support the implementation of the RTD priorities of the JTI on Fuel Cells and Hydrogen, notably by awarding grants following competitive calls for proposals, |
| --- | --- |

—

support the implementation of the RTD priorities of the JTI on Fuel Cells and Hydrogen, notably by awarding grants following competitive calls for proposals,

| — | aim to encourage increased public and private research investment in fuel cells and hydrogen technologies in the Member States and Associated countries. |
| --- | --- |

—

aim to encourage increased public and private research investment in fuel cells and hydrogen technologies in the Member States and Associated countries.

Tasks

| — | to ensure the establishment and the efficient management of the Joint Technology Initiative on Fuel Cells and Hydrogen, |
| --- | --- |

—

to ensure the establishment and the efficient management of the Joint Technology Initiative on Fuel Cells and Hydrogen,

| — | to reach the critical mass of research effort to give confidence to industry, public and private investors, decision-makers and other stakeholders to embark on a long-term programme, |
| --- | --- |

—

to reach the critical mass of research effort to give confidence to industry, public and private investors, decision-makers and other stakeholders to embark on a long-term programme,

| — | to leverage further industrial, national and regional RTD investment, |
| --- | --- |

—

to leverage further industrial, national and regional RTD investment,

| — | to integrate RTD, and focus on achieving long-term sustainability and industrial competitiveness targets for cost, performance and durability and overcome critical technology bottlenecks, |
| --- | --- |

—

to integrate RTD, and focus on achieving long-term sustainability and industrial competitiveness targets for cost, performance and durability and overcome critical technology bottlenecks,

| — | to stimulate innovation and the emergence of new value chains including SMEs, |
| --- | --- |

—

to stimulate innovation and the emergence of new value chains including SMEs,

| — | to facilitate the interaction between industry, universities and research centres including on basic research, |
| --- | --- |

—

to facilitate the interaction between industry, universities and research centres including on basic research,

| — | to promote the involvement of SMEs in its activities, in line with the objectives of the Seventh Framework Programme, |
| --- | --- |

—

to promote the involvement of SMEs in its activities, in line with the objectives of the Seventh Framework Programme,

| — | to encourage the participation of institutions from all Member States and Associated countries, |
| --- | --- |

—

to encourage the participation of institutions from all Member States and Associated countries,

| — | to perform broadly-conceived socio-techno-economic research to assess and monitor technological progress and non-technical barriers to market entry, |
| --- | --- |

—

to perform broadly-conceived socio-techno-economic research to assess and monitor technological progress and non-technical barriers to market entry,

| — | to perform research to support the development of new, and review existing, regulations and standards to eliminate artificial barriers to market entry and support interchangeability, inter-operability, cross-border hydrogen trading, and export markets, whilst ensuring safe operation and not inhibiting innovation, |
| --- | --- |

—

to perform research to support the development of new, and review existing, regulations and standards to eliminate artificial barriers to market entry and support interchangeability, inter-operability, cross-border hydrogen trading, and export markets, whilst ensuring safe operation and not inhibiting innovation,

| — | to undertake communication and dissemination activities, and to provide reliable information to improve public awareness and create public acceptance concerning hydrogen safety, and the benefits from the new technologies to the environment, security of supply, energy costs, and employment, |
| --- | --- |

—

to undertake communication and dissemination activities, and to provide reliable information to improve public awareness and create public acceptance concerning hydrogen safety, and the benefits from the new technologies to the environment, security of supply, energy costs, and employment,

| — | to establish and implement a Multiannual Implementation Plan, |
| --- | --- |

—

to establish and implement a Multiannual Implementation Plan,

| — | to commit the Community funding and mobilise the private-sector and other public-sector resources needed to implement its RTD activities, |
| --- | --- |

—

to commit the Community funding and mobilise the private-sector and other public-sector resources needed to implement its RTD activities,

| — | to ensure the sound operation of the RTD activities and sound financial management of the resources, |
| --- | --- |

—

to ensure the sound operation of the RTD activities and sound financial management of the resources,

| — | to communicate and disseminate information on the projects, including the names of the participants, the results from the RTD activities, and the amount of the financial contribution from the FCH Joint Undertaking, |
| --- | --- |

—

to communicate and disseminate information on the projects, including the names of the participants, the results from the RTD activities, and the amount of the financial contribution from the FCH Joint Undertaking,

| — | to notify the legal entities that have concluded a Grant Agreement with the FCH Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme, |
| --- | --- |

—

to notify the legal entities that have concluded a Grant Agreement with the FCH Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme,

| — | to ensure a high level of transparency and fair competition under equal access conditions for all applicants to the RTD activities of the FCH Joint Undertaking, whether or not they are members of the Research Grouping or the Industry Grouping (in particular SMEs), |
| --- | --- |

—

to ensure a high level of transparency and fair competition under equal access conditions for all applicants to the RTD activities of the FCH Joint Undertaking, whether or not they are members of the Research Grouping or the Industry Grouping (in particular SMEs),

| — | to follow the international developments in the area and engage in international cooperation when appropriate, |
| --- | --- |

—

to follow the international developments in the area and engage in international cooperation when appropriate,

| — | to develop close cooperation and ensure coordination with the Research Framework Programme and other European, national and trans-national activities, bodies and stakeholders, |
| --- | --- |

—

to develop close cooperation and ensure coordination with the Research Framework Programme and other European, national and trans-national activities, bodies and stakeholders,

| — | to monitor progress toward the objectives of the FCH Joint Undertaking, |
| --- | --- |

—

to monitor progress toward the objectives of the FCH Joint Undertaking,

| — | to carry out any other activity needed to achieve its objectives. |
| --- | --- |

—

to carry out any other activity needed to achieve its objectives.

Governance

The bodies of the FCH Joint Undertaking are:

| (a) | the Governing Board; |
| --- | --- |

(a)

the Governing Board;

| (b) | the Executive Director; |
| --- | --- |

(b)

the Executive Director;

| (c) | the Scientific Committee. |
| --- | --- |

(c)

the Scientific Committee.

1 –   The Governing Board

The Governing Board is the main decision-making body of the FCH Joint Undertaking.

2 –   The Director

The Executive Director is responsible for the day-to-day management of the Joint Undertaking and is its legal representative. He is accountable to the Governing Board.

3 –   The Committees

Scientific Committee - Composed of up to nine members reflecting a balanced representation of world-class expertise from academia, industry and regulatory bodies.

Its tasks are to:

| (a) | advise on the scientific priorities for the annual and Multiannual Implementation Plans proposal; |
| --- | --- |

(a)

advise on the scientific priorities for the annual and Multiannual Implementation Plans proposal;

| (b) | advise on the scientific achievements described in the annual activity report; |
| --- | --- |

(b)

advise on the scientific achievements described in the annual activity report;

| (c) | advise on the composition of the peer review committees. |
| --- | --- |

(c)

advise on the composition of the peer review committees.

The external advisory bodies to the FCH Joint Undertaking are:

the FCH States Representatives Group and the Stakeholders General Assembly.

4 –   The FCH States Representatives Group

It consists of one representative of each Member State and of each Associated country.

Its most important tasks comprise providing opinions on the programme progress of the FCH JU, monitoring compliance and respect of targets and coordination with national programmes to avoid overlapping.

5 –   The Stakeholders General Assembly

The SGA is an important communication channel on FCH JU activities and as such is open to all public and private stakeholders, international interest groups from Member States, Associated countries as well as from third countries. It is convened once a year. The SGA shall be informed of the activities of the FCH Joint Undertaking and shall be invited to provide comments.

The internal and external auditors and the discharge authority of the FCH Joint Undertaking are:

6 –   Internal Audit

| — | FCH JU Internal Audit Manager (i.e. the Internal Audit Capability - IAC), |
| --- | --- |

—

FCH JU Internal Audit Manager (i.e. the Internal Audit Capability - IAC),

| — | the Commission's Internal Audit Service (i.e. IAS). |
| --- | --- |

—

the Commission's Internal Audit Service (i.e. IAS).

7 –   External Audit

Court of Auditors.

8 –   Discharge Authority

The European Parliament on a recommendation from the Council.

Resources available to the Joint Undertaking in 2010

Budget

97,4 million euro in Commitment Appropriations of which 94,2 million euro funded by the EU budget contribution for operations (an equivalent in-kind contribution from private industry members is planned) and 3,2 million euro for running costs.

Staff at 31 December 2010

18 temporary staff posts in the establishment plan of which 14 were filled-in at 31 December 2010.

Other staff:

| — | Seconded National Experts: n/a |
| --- | --- |

—

Seconded National Experts: n/a

| — | Contract staff: 2 |
| --- | --- |

—

Contract staff: 2

| — | Local staff: n/a |
| --- | --- |

—

Local staff: n/a

Allocated to:

| — | Operational activities: 6 |
| --- | --- |

—

Operational activities: 6

| — | Administrative tasks: 6 |
| --- | --- |

—

Administrative tasks: 6

| — | Mixed tasks: 6 |
| --- | --- |

—

Mixed tasks: 6

Activities and services provided in 2010

Operational achievements

| — | Revision of the Multi Annual Implementation Plan (MAIP), launched in November 2010 with the focus on updating programme targets and priorities, |
| --- | --- |

—

Revision of the Multi Annual Implementation Plan (MAIP), launched in November 2010 with the focus on updating programme targets and priorities,

| — | Drafting of the RTD priorities and 2010 call topics (25) with an indicative FCH JU funding of 89,1 million euro, |
| --- | --- |

—

Drafting of the RTD priorities and 2010 call topics (25) with an indicative FCH JU funding of 89,1 million euro,

| — | Publication of the 2010 call for proposals in June 2010 with a deadline for submission in October 2010, |
| --- | --- |

—

Publication of the 2010 call for proposals in June 2010 with a deadline for submission in October 2010,

| — | Evaluation of the 2010 call for proposals in November 2010 with preparation of a list of projects for which negotiations are to be entered into; list to be submitted to the Board for approval in Q1 2011, |
| --- | --- |

—

Evaluation of the 2010 call for proposals in November 2010 with preparation of a list of projects for which negotiations are to be entered into; list to be submitted to the Board for approval in Q1 2011,

| — | Negotiation of the 2009 call for selected proposals after approval of the correction factor by the Governing Board and conclusion of the related grant agreements (28), |
| --- | --- |

—

Negotiation of the 2009 call for selected proposals after approval of the correction factor by the Governing Board and conclusion of the related grant agreements (28),

| — | Development of the international cooperation with key partners (USA, Japan and Korea), |
| --- | --- |

—

Development of the international cooperation with key partners (USA, Japan and Korea),

| — | Exchange of information with the Member States and the Associated countries (information sessions), |
| --- | --- |

—

Exchange of information with the Member States and the Associated countries (information sessions),

| — | Cooperation with the European Regions (via HyRaMP), |
| --- | --- |

—

Cooperation with the European Regions (via HyRaMP),

| — | Cooperation with the Joint Research Centre (JRC) at project and programme level. Alignment of the activities by a Joint Work Plan focused on measuring, technology mapping and strategic advice; Stakeholders General Assembly held on 9-10 November with 444 registered participants and other communication activities, with the focus being on commercialisation of FCH technologies, in particular in the transport sector. |
| --- | --- |

—

Cooperation with the Joint Research Centre (JRC) at project and programme level. Alignment of the activities by a Joint Work Plan focused on measuring, technology mapping and strategic advice; Stakeholders General Assembly held on 9-10 November with 444 registered participants and other communication activities, with the focus being on commercialisation of FCH technologies, in particular in the transport sector.

Other main achievements

| — | Completion of the internal control system; adoption of the internal control standards; development of a risk management process; adoption of the ex-post audit strategy, |
| --- | --- |

—

Completion of the internal control system; adoption of the internal control standards; development of a risk management process; adoption of the ex-post audit strategy,

| — | FCH JU autonomy was granted on 15 November 2010, |
| --- | --- |

—

FCH JU autonomy was granted on 15 November 2010,

| — | Negotiation of new premises to house FCH together with four other JTIs and setting-up of new IT infrastructure ready for the removal (effective mid-January 2011). |
| --- | --- |

—

Negotiation of new premises to house FCH together with four other JTIs and setting-up of new IT infrastructure ready for the removal (effective mid-January 2011).

Source: Information supplied by the Joint Undertaking.

---

REPLIES OF THE JOINT UNDERTAKING

Paragraph 16

FCH JU shares the Court’s view that the period from the entry into force of the Council Regulation setting up the JU to the date of the actual financial autonomy was long. However, FCH JU would like to point out that all necessary steps were taken by the JU towards the autonomy (e.g. a readiness assessment report proving compliance with the autonomy criteria was submitted to the Commission on time) and therefore the delay in granting autonomy was the result of events out of the JU’s control; the 2010 operational payments were made during the last weeks of 2010 not as a result of the delayed financial autonomy but because the operational and financial conditions to proceed with the payment were met at that time. Indeed, if the conditions would have been met before, the Commission would have proceeded with the payments, even before the financial autonomy of the JU, as it was the case in the previous call in accordance with Article 16 of the Council Regulation.

Paragraph 17

FCH JU is committed to validate the accounting system in the course of 2011 as this was not realistic and feasible with the resources available in 2010. We will follow the guidelines for system validation issued by the Commission, including the sampling of transactions in all relevant areas.

Paragraph 18

The FCH JU is committed to formalise its IT strategy, security rules for access to documents as well as a business continuity plan, including a Disaster Recovery Plan, by the end of 2011.

Paragraph 19

The FCH JU has drafted a methodology in Q2 2011 that will be submitted to the GB for adoption at its next meeting in November 2011.

Paragraph 20

As stated by the Court, the Commission and the Joint Undertaking have taken action to ensure that the respective roles of the Commission’s Internal Audit Service (IAS) and the Joint Undertaking’s Internal Audit Manager (IAM) are clearly defined. In particular, the Governing Board confirmed the powers of the IAS in line with the Framework Financial Regulation in its meeting of 10 November 2010, the IAS and IAM Audit Charters were approved by the Governing Board and the Executive Director on 10 and 18 March 2011, respectively, and a ‘Coordinated IAS-IAM strategic audit plan for the period 2011-2013’ was adopted by the Governing Board on 19 May 2011 and is being implemented as planned.

Taking into consideration the actions indicated above which clarify the roles of the IAS and the IAM, the FCH JU is of the opinion that there is no need to amend the Joint Undertaking’s financial rules. However, after finalisation of the ongoing revision of the Commission’s Framework Financial Regulation, the Joint Undertaking will assess the need and appropriateness to amend its financial rules on all relevant aspects, including the audit function.

Paragraph 21

The JUs have again contacted the Belgian authorities early June 2011 to finalise an agreeable text based on the Belgian proposal and the comments from the Commission. However, the FCH JU would like to highlight that the residual risk of the delay in signing this host agreement is (extremely) limited as: (1) the Protocol on Privileges and Immunities is directly applicable to the JUs and its staff by the regulation setting up the JUs; and (2) the Belgian authorities apply it in practice without difficulties.

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| 16.12.2011 | EN | Official Journal of the European Union | C 368/48 |
| --- | --- | --- | --- |

16.12.2011

EN

Official Journal of the European Union

C 368/48

---

REPORT

on the annual accounts of the ENIAC Joint Undertaking for the financial year 2010, together with the replies of the Joint Undertaking

2011/C 368/07

INTRODUCTION

| 1. | The European Joint Undertaking for the implementation of the Joint Technology Initiative on Nanoelectronics (ENIAC Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
| --- | --- |

1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Nanoelectronics (ENIAC Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The main objective of the Joint Undertaking is to define and implement a ‘research agenda’ for the development of key competences for nanoelectronics across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2). |
| --- | --- |

2.

The main objective of the Joint Undertaking is to define and implement a ‘research agenda’ for the development of key competences for nanoelectronics across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2).

| 3. | The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, the Member States Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, the Netherlands, Poland, Portugal, Sweden and the United Kingdom, and the Association for European Nanoelectronics Activities (AENEAS). Other Member States and associated countries, as well as any other country or legal entity capable of making a substantial financial contribution to the achievement of the Joint Undertaking's objectives may become members of the ENIAC Joint Undertaking. |
| --- | --- |

3.

The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, the Member States Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, the Netherlands, Poland, Portugal, Sweden and the United Kingdom, and the Association for European Nanoelectronics Activities (AENEAS). Other Member States and associated countries, as well as any other country or legal entity capable of making a substantial financial contribution to the achievement of the Joint Undertaking's objectives may become members of the ENIAC Joint Undertaking.

| 4. | The maximum EU contribution to the ENIAC Joint Undertaking to cover running costs and research activities is 450 million euro to be paid from the budget of the Seventh Research Framework Programme (3). AENEAS is to make a maximum contribution of 30 million euro to the running costs of the Joint Undertaking. ENIAC Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects. The organisations participating in the research projects must make in-kind contributions at least equal to the contribution of the Commission and the Member States. |
| --- | --- |

4.

The maximum EU contribution to the ENIAC Joint Undertaking to cover running costs and research activities is 450 million euro to be paid from the budget of the Seventh Research Framework Programme (3). AENEAS is to make a maximum contribution of 30 million euro to the running costs of the Joint Undertaking. ENIAC Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects. The organisations participating in the research projects must make in-kind contributions at least equal to the contribution of the Commission and the Member States.

| 5. | The Joint Undertaking was granted its financial autonomy on 26 July 2010. |
| --- | --- |

5.

The Joint Undertaking was granted its financial autonomy on 26 July 2010.

STATEMENT OF ASSURANCE

| 6. | Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union the Court has audited the annual accounts (4) of the ENIAC Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union the Court has audited the annual accounts (4) of the ENIAC Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

| 7. | This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7). |
| --- | --- |

7.

This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (7).

The Director's responsibility

| 8. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's financial rules, under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular. |
| --- | --- |

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's financial rules, under his own responsibility and within the limits of the authorised appropriations (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) that are free from material misstatement, whether due to fraud or error and for ensuring that the transactions underlying those accounts are legal and regular.

The Court's responsibility

| 9. | The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them. |
| --- | --- |

9.

The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

| 10. | The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
| --- | --- |

10.

The Court conducted its audit in accordance with the IFAC and ISSAI (11) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

| 11. | The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
| --- | --- |

11.

The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 12. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
| --- | --- |

12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Basis for qualified opinion on the reliability of the accounts

| 13. | The Budgetary Outturn Account and its reconciliation to the Economic Outturn Account, required by EC Accounting Rule 16 ‘Presentation of budget information in the annual accounts’, have not been included in the accounts. |
| --- | --- |

13.

The Budgetary Outturn Account and its reconciliation to the Economic Outturn Account, required by EC Accounting Rule 16 ‘Presentation of budget information in the annual accounts’, have not been included in the accounts.

Qualified opinion on the reliability of the accounts

| 14. | In the Court's opinion, except for the effects of the matter described in the basis for qualified opinion paragraph, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules. |
| --- | --- |

14.

In the Court's opinion, except for the effects of the matter described in the basis for qualified opinion paragraph, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010 the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

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

| 15. | In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
| --- | --- |

15.

In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 16. | The comments which follow in paragraphs 17-25 do not call the Court's opinions into question. |
| --- | --- |

16.

The comments which follow in paragraphs 17-25 do not call the Court's opinions into question.

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 17. | The final budget for 2010 included commitment and payment appropriations amounting to 38 million euro. The utilisation rates for the available commitment and payment appropriations were 99 % and 24 % respectively. Payment appropriations of 29 million euro were carried over to 2011. The low implementation of the payment appropriations is the result of the delayed transfer of the operational activities and the corresponding funding from the Commission to the Joint Undertaking (see paragraph 23) (12). This is also reflected in the cash balance, which stood at 20 million euro at the end of the year (53 % of the available payment appropriations for 2010). |
| --- | --- |

17.

The final budget for 2010 included commitment and payment appropriations amounting to 38 million euro. The utilisation rates for the available commitment and payment appropriations were 99 % and 24 % respectively. Payment appropriations of 29 million euro were carried over to 2011. The low implementation of the payment appropriations is the result of the delayed transfer of the operational activities and the corresponding funding from the Commission to the Joint Undertaking (see paragraph 23) (12). This is also reflected in the cash balance, which stood at 20 million euro at the end of the year (53 % of the available payment appropriations for 2010).

Internal control systems

| 18. | The Joint Undertaking has not fully implemented its internal controls and financial information systems. In particular, further work is needed in establishing and documenting the accounting procedures and controls relating to the closure of the accounts and to the recognition and measurement of the operational expenditure. These are important elements of the Joint Undertaking's system of internal control. |
| --- | --- |

18.

The Joint Undertaking has not fully implemented its internal controls and financial information systems. In particular, further work is needed in establishing and documenting the accounting procedures and controls relating to the closure of the accounts and to the recognition and measurement of the operational expenditure. These are important elements of the Joint Undertaking's system of internal control.

| 19. | Control weaknesses were detected in the area of ex-ante financial verification of pre-financing payments, in particular regarding the calculation and validation of the amounts to be paid. It was also noted that full reliance was placed on the certificates received from the National Funding Authorities (NFAs) for pre-financing payments and for acceptance of costs and that no other checks were performed to ensure the legality and regularity (13) of the expenses declared. |
| --- | --- |

19.

Control weaknesses were detected in the area of ex-ante financial verification of pre-financing payments, in particular regarding the calculation and validation of the amounts to be paid. It was also noted that full reliance was placed on the certificates received from the National Funding Authorities (NFAs) for pre-financing payments and for acceptance of costs and that no other checks were performed to ensure the legality and regularity (13) of the expenses declared.

| 20. | The ex-post audit of project cost claims has been fully delegated to the Member States without any control being exercised by the Joint Undertaking (14). This will make it difficult for the Joint Undertaking to ensure: (i) that the financial interests of its Members are adequately protected, as required by its Council Regulation (15); and (ii) the legality and regularity of the underlying transactions. |
| --- | --- |

20.

The ex-post audit of project cost claims has been fully delegated to the Member States without any control being exercised by the Joint Undertaking (14). This will make it difficult for the Joint Undertaking to ensure: (i) that the financial interests of its Members are adequately protected, as required by its Council Regulation (15); and (ii) the legality and regularity of the underlying transactions.

| 21. | The Accounting Officer of the Joint Undertaking validated the financial and accounting systems (ABAC and SAP) on 20 December 2010. However, the underlying business processes which provide financial information were not validated, in particular the one providing financial information about the validation and payment of the cost claims received from the national authorities. |
| --- | --- |

21.

The Accounting Officer of the Joint Undertaking validated the financial and accounting systems (ABAC and SAP) on 20 December 2010. However, the underlying business processes which provide financial information were not validated, in particular the one providing financial information about the validation and payment of the cost claims received from the national authorities.

| 22. | The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in some areas (16). |
| --- | --- |

22.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in some areas (16).

Delayed financial autonomy

| 23. | The Council Regulation setting up the Joint Undertaking came into force in February 2008. In May 2010 the financial and accounting systems were deployed and tested successfully and the administrative appropriations were transferred to the Joint Undertaking. However, the operational budget lines were not transferred and remained inaccessible in the accounting system until the Joint Undertaking was officially granted financial autonomy on 26 July 2010. The cash transfer from the Commission to the Joint Undertaking covering the operational appropriations was made on 22 September 2010. It was only from that date onwards that the Joint Undertaking was able to make operational payments. |
| --- | --- |

23.

The Council Regulation setting up the Joint Undertaking came into force in February 2008. In May 2010 the financial and accounting systems were deployed and tested successfully and the administrative appropriations were transferred to the Joint Undertaking. However, the operational budget lines were not transferred and remained inaccessible in the accounting system until the Joint Undertaking was officially granted financial autonomy on 26 July 2010. The cash transfer from the Commission to the Joint Undertaking covering the operational appropriations was made on 22 September 2010. It was only from that date onwards that the Joint Undertaking was able to make operational payments.

OTHER MATTERS

Internal audit function and the Commission's Internal Audit Service

| 24. | The mission charter of the Commission's Internal Audit Service was adopted by the Governing Board on 18 November 2010. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (17) referring to the powers of the Commission's internal auditor. |
| --- | --- |

24.

The mission charter of the Commission's Internal Audit Service was adopted by the Governing Board on 18 November 2010. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (17) referring to the powers of the Commission's internal auditor.

Lack of host State agreement

| 25. | According to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, as at the end of 2010, no such agreement had been signed. |
| --- | --- |

25.

According to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, as at the end of 2010, no such agreement had been signed.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 25 October 2011.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  Council Regulation (EC) No 72/2008 of 20 December 2007 setting up the ENIAC Joint Undertaking (OJ L 30, 4.2.2008, p. 21).

1

(2)  The Annex summarises the Joint Undertaking's competences, activities and available resources. It is presented for information purposes.

2

Annex

(3)  The Seventh Framework Programme, adopted by Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006, brings all the research-related EU initiatives together under one roof and plays a crucial role in achieving the goals of growth, competitiveness and employment. It is also a key pillar for the European Research Area.

3

(4)  The Court received the annual accounts on 1 July 2011 and a corrigendum to these accounts on 7 October 2011. These accounts are accompanied by a report on the budgetary and financial management during the year which gives, inter alia, an account of the rate of implementation of the appropriations.

4

(5)  The financial statements include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and the annex to the financial statements, which includes a description of the main accounting policies and other explanatory information.

5

(6)  The budget implementation reports comprise the budget outturn account and its annex.

6

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

7

(8)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

8

(9)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

9

(10)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002, as last amended by Regulation (EC, Euratom) No 652/2008 (OJ L 181, 10.7.2008, p. 23), and are integrated as such in the financial rules of the Joint Undertaking.

10

(11)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

11

(12)  Payments were made for the projects of the 2008 and 2009 calls from 22 September 2010 onwards.

12

(13)  Article 13(6) of the Statutes of the ENIAC Joint Undertaking annexed to the Council Regulation setting up the Joint Undertaking states that ‘ENIAC Member States shall establish grant agreements with participants in projects in accordance with their national rules, in particular as regards eligibility criteria and other necessary financial and legal requirements’.

13

(14)  The administrative agreements signed with the National Funding Authorities (NFAs) do not explicitly detail the practical arrangements for the ex-post audits (i.e. audit methodology, procedures to be applied) to be performed by the NFAs. The NFAs are legally bound only to communicate the results of these audits to the Joint Undertaking.

14

ex-post

(15)  Article 12 of the Council Regulation setting up the Joint Undertaking states that the Joint Undertaking ‘shall ensure that the financial interests of its members are adequately protected by carrying out or commissioning appropriate internal and external controls’ and that it ‘shall carry out on-the-spot checks and financial audits among the recipients of the ENIAC Joint Undertaking's public funding. These checks and audits shall be performed either directly by the ENIAC Joint Undertaking or by ENIAC member States on its behalf.’

15

(16)  Namely: (a) incomplete IT strategic planning cycle; (b) lack of proper data classification according to confidentiality and integrity requirements; and (c) lack of formal Disaster Recovery Plan (DRP).

16

(17)  Commission Regulation (EC, Euratom) No 2343/2002 of 23 December 2002 on the Framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities.

17

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ANNEX

ENIAC Joint Undertaking (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 187 of the Treaty on the Functioning of the European Union) | The Joint Undertaking is a Union body and the implementation of its budget is therefore subject to discharge by the European Parliament, taking into account, however, the specificities resulting from the nature of JTIs as public-private partnerships and in particular from the private sector contribution.
  The ENIAC Joint Undertaking was established by Council Regulation (EC) No 72/2008 of 20 December 2007 (OJ L 30, 4.2.2008, p. 21). |
| --- | --- |
| Competences of the Joint Undertaking


  (Council Regulation (EC) No 72/2008) | Objectives

  The ENIAC Joint Undertaking contributes to the implementation of the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-13) and the Theme ‘Information and Communication Technologies’ of the Specific Programme ‘Cooperation’ implementing the Seventh Framework Programme (2007-13) of the European Community for research, technological development and demonstration activities. It shall, in particular:






  — | define and implement a Research Agenda for the development of key competences for Nanoelectronics across different application areas in order to strengthen European competitiveness and sustainability and allow the emergence of new markets and societal applications, |

Areas of Union competence deriving from the Treaty

(Article 187 of the Treaty on the Functioning of the European Union)

The Joint Undertaking is a Union body and the implementation of its budget is therefore subject to discharge by the European Parliament, taking into account, however, the specificities resulting from the nature of JTIs as public-private partnerships and in particular from the private sector contribution.

The ENIAC Joint Undertaking was established by Council Regulation (EC) No 72/2008 of 20 December 2007 (OJ L 30, 4.2.2008, p. 21).

Competences of the Joint Undertaking

(Council Regulation (EC) No 72/2008)

Objectives

The ENIAC Joint Undertaking contributes to the implementation of the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-13) and the Theme ‘Information and Communication Technologies’ of the Specific Programme ‘Cooperation’ implementing the Seventh Framework Programme (2007-13) of the European Community for research, technological development and demonstration activities. It shall, in particular:

—

define and implement a Research Agenda for the development of key competences for Nanoelectronics across different application areas in order to strengthen European competitiveness and sustainability and allow the emergence of new markets and societal applications,

| — | support the activities required for the implementation of the Research Agenda (hereinafter ‘R&D activities’), notably by awarding funding to participants in selected projects following competitive calls for proposals, |
| --- | --- |

—

support the activities required for the implementation of the Research Agenda (hereinafter ‘R&D activities’), notably by awarding funding to participants in selected projects following competitive calls for proposals,

| — | promote a public-private partnership aiming at mobilising and pooling Union, national and private efforts, increasing overall R&D investments in the field of Nanoelectronics, and fostering collaboration between the public and private sectors, |
| --- | --- |

—

promote a public-private partnership aiming at mobilising and pooling Union, national and private efforts, increasing overall R&D investments in the field of Nanoelectronics, and fostering collaboration between the public and private sectors,

| — | ensure the efficiency and durability of the JTI on Nanoelectronics, |
| --- | --- |

—

ensure the efficiency and durability of the JTI on Nanoelectronics,

| — | achieve synergy and coordination of European R&D efforts in the field of Nanoelectronics including the progressive integration into the ENIAC Joint Undertaking of the related activities in this field currently implemented through intergovernmental R&D schemes (EUREKA). |
| --- | --- |

—

achieve synergy and coordination of European R&D efforts in the field of Nanoelectronics including the progressive integration into the ENIAC Joint Undertaking of the related activities in this field currently implemented through intergovernmental R&D schemes (EUREKA).

Governance

1 –   Members

The founding members of the ENIAC Joint Undertaking are:

| — | the European Community, represented by the Commission, |
| --- | --- |

—

the European Community, represented by the Commission,

| — | Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, the Netherlands, Poland, Portugal, Sweden and the United Kingdom, |
| --- | --- |

—

Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, the Netherlands, Poland, Portugal, Sweden and the United Kingdom,

| — | the AENEAS association (hereinafter ‘AENEAS’). |
| --- | --- |

—

the AENEAS association (hereinafter ‘AENEAS’).

Provided that they subscribe to the objectives laid down in Article 2 of the Founding Regulation, the following entities may become members of the ENIAC Joint Undertaking:

| — | other Member States and countries associated with the Seventh Framework Programme, |
| --- | --- |

—

other Member States and countries associated with the Seventh Framework Programme,

| — | any non-EU, non-candidate and non-associated country (hereinafter ‘Third Country’) pursuing R&D policies or programmes in the area of Nanoelectronics, |
| --- | --- |

—

any non-EU, non-candidate and non-associated country (hereinafter ‘Third Country’) pursuing R&D policies or programmes in the area of Nanoelectronics,

| — | any legal entity capable of making a substantial financial contribution to the achievement of the objectives of the ENIAC Joint Undertaking. |
| --- | --- |

—

any legal entity capable of making a substantial financial contribution to the achievement of the objectives of the ENIAC Joint Undertaking.

The founding members and new members shall be hereinafter referred to as ‘Members’.

Member States and Associated Countries that are members of the ENIAC Joint Undertaking shall be hereinafter referred to as ‘ENIAC Member States’.

2 –   The Governing Board

The Governing Board shall consist of representatives of the Members of the ENIAC Joint Undertaking and the Chairperson of the Industry and Research Committee.

The Governing Board shall have overall responsibility for the operations of the ENIAC Joint Undertaking and shall oversee the implementation of its activities. The Governing Board shall in particular:

| — | assess applications and decide or recommend changes in membership, |
| --- | --- |

—

assess applications and decide or recommend changes in membership,

| — | decide on the termination of the membership of any Member that is in default of its obligations and has not remedied this within a reasonable period set by the Executive Director, notwithstanding the provisions of the Treaty ensuring compliance with Union law, |
| --- | --- |

—

decide on the termination of the membership of any Member that is in default of its obligations and has not remedied this within a reasonable period set by the Executive Director, notwithstanding the provisions of the Treaty ensuring compliance with Union law,

| — | approve the Financial Regulation of the ENIAC Joint Undertaking, |
| --- | --- |

—

approve the Financial Regulation of the ENIAC Joint Undertaking,

| — | adopt proposed amendments to the Statutes, |
| --- | --- |

—

adopt proposed amendments to the Statutes,

| — | approve the Multiannual Strategic Plan including the Research Agenda, |
| --- | --- |

—

approve the Multiannual Strategic Plan including the Research Agenda,

| — | supervise the overall activities of the ENIAC Joint Undertaking, |
| --- | --- |

—

supervise the overall activities of the ENIAC Joint Undertaking,

| — | supervise progress in implementing the Multiannual Strategic Plan, |
| --- | --- |

—

supervise progress in implementing the Multiannual Strategic Plan,

| — | approve the Annual Implementation Plan and the Annual Budget Plan, including the staff establishment plan, |
| --- | --- |

—

approve the Annual Implementation Plan and the Annual Budget Plan, including the staff establishment plan,

| — | approve the Annual Activity Report and the Annual Accounts and balance sheet, |
| --- | --- |

—

approve the Annual Activity Report and the Annual Accounts and balance sheet,

| — | appoint, dismiss or replace the Executive Director, provide guidance to the Executive Director, and monitor the Executive Director's performance, |
| --- | --- |

—

appoint, dismiss or replace the Executive Director, provide guidance to the Executive Director, and monitor the Executive Director's performance,

| — | take responsibility for the appropriate provision of the function entrusted by Article 185(3) of Regulation (EC, Euratom) No 1605/2002 to the Commission's internal auditor, |
| --- | --- |

—

take responsibility for the appropriate provision of the function entrusted by Article 185(3) of Regulation (EC, Euratom) No 1605/2002 to the Commission's internal auditor,

| — | adopt the necessary implementing measures for the Staff Regulation of the ENIAC Joint Undertaking, |
| --- | --- |

—

adopt the necessary implementing measures for the Staff Regulation of the ENIAC Joint Undertaking,

| — | establish committees or working groups to carry out specific tasks as necessary, |
| --- | --- |

—

establish committees or working groups to carry out specific tasks as necessary,

| — | adopt its rules of procedure, |
| --- | --- |

—

adopt its rules of procedure,

and assign any task not specifically allocated to one of the other Bodies of the ENIAC Joint Undertaking.

3 –   The Public Authorities Board

The Public Authorities Board shall consist of the public authorities of the ENIAC Joint Undertaking. The Public Authorities Board shall:

| — | ensure that the principles of fairness and transparency are properly applied in the allocation of public funding to participants in Projects, |
| --- | --- |

—

ensure that the principles of fairness and transparency are properly applied in the allocation of public funding to participants in Projects,

| — | approve the Annual Work Programme upon proposals from the Industry and Research Committee, including the budgets available for calls for proposals, |
| --- | --- |

—

approve the Annual Work Programme upon proposals from the Industry and Research Committee, including the budgets available for calls for proposals,

| — | approve the rules of procedure for calls for proposals, for the evaluation and selection of proposals and for monitoring of Projects, |
| --- | --- |

—

approve the rules of procedure for calls for proposals, for the evaluation and selection of proposals and for monitoring of Projects,

| — | upon proposal of the representative of the Community, decide on the ENIAC Joint Undertaking financial contribution to the budget of the calls for proposals, |
| --- | --- |

—

upon proposal of the representative of the Community, decide on the ENIAC Joint Undertaking financial contribution to the budget of the calls for proposals,

| — | approve the launch of calls for proposals, |
| --- | --- |

—

approve the launch of calls for proposals,

| — | approve the selection of project proposals to receive public funding following calls for proposals, |
| --- | --- |

—

approve the selection of project proposals to receive public funding following calls for proposals,

| — | upon proposal of the representative of the Community, decide on the percentage of the ENIAC Joint Undertaking's financial contribution to participants in Projects arising from calls for proposals in any given year, |
| --- | --- |

—

upon proposal of the representative of the Community, decide on the percentage of the ENIAC Joint Undertaking's financial contribution to participants in Projects arising from calls for proposals in any given year,

and adopt its rules of procedure.

4 –   The Industry and Research Committee

AENEAS shall appoint the members of the Industry and Research Committee. The Industry and Research Committee shall consist of no more than 25 members.

The Industry and Research Committee shall:

| — | elaborate the draft Multiannual Strategic Plan, including the content and update of the Research Agenda, and submit it to the Governing Board for approval, |
| --- | --- |

—

elaborate the draft Multiannual Strategic Plan, including the content and update of the Research Agenda, and submit it to the Governing Board for approval,

| — | prepare the draft Annual Work Programme, including proposals for the content of calls for proposals to be launched by the ENIAC Joint Undertaking, |
| --- | --- |

—

prepare the draft Annual Work Programme, including proposals for the content of calls for proposals to be launched by the ENIAC Joint Undertaking,

| — | elaborate proposals regarding the technological, research and innovation strategy of the ENIAC Joint Undertaking, |
| --- | --- |

—

elaborate proposals regarding the technological, research and innovation strategy of the ENIAC Joint Undertaking,

| — | elaborate proposals for activities regarding the creation of open innovation environments, promoting the participation of SMEs, developing standards transparently and with openness to participation, international cooperation, dissemination and public relations, |
| --- | --- |

—

elaborate proposals for activities regarding the creation of open innovation environments, promoting the participation of SMEs, developing standards transparently and with openness to participation, international cooperation, dissemination and public relations,

| — | advise the other Bodies on any issue related to planning and operating research and development programmes, fostering partnerships and leveraging resources in Europe in order to achieve the objectives of the ENIAC Joint Undertaking, |
| --- | --- |

—

advise the other Bodies on any issue related to planning and operating research and development programmes, fostering partnerships and leveraging resources in Europe in order to achieve the objectives of the ENIAC Joint Undertaking,

| — | appoint working groups where necessary under the overall coordination of one or more members of this Committee in order to achieve the above tasks, |
| --- | --- |

—

appoint working groups where necessary under the overall coordination of one or more members of this Committee in order to achieve the above tasks,

| — | adopt its rules of procedure. |
| --- | --- |

—

adopt its rules of procedure.

5 –   The Executive Director

The Executive Director shall be the chief executive responsible for the day-to-day management of the ENIAC Joint Undertaking and be its legal representative. He/she shall perform his/her tasks with complete independence and shall be accountable to the Governing Board. The Director shall exercise, in respect of the staff, the powers laid down in Article 7(2) of the Council Regulation setting up the ENIAC Joint Undertaking.

The role and tasks of the Executive Director shall be:

| — | to prepare the Annual Implementation Plan and the Annual Budget Plan, in collaboration with the Industry and Research Committee, and submit them to the Governing Board for approval, |
| --- | --- |

—

to prepare the Annual Implementation Plan and the Annual Budget Plan, in collaboration with the Industry and Research Committee, and submit them to the Governing Board for approval,

| — | to oversee the organisation and execution of all activities needed to carry out the Annual Implementation Plan within the framework and the rules laid down by the Statutes and subsequent decisions adopted by the Governing Board and the Public Authorities Board, |
| --- | --- |

—

to oversee the organisation and execution of all activities needed to carry out the Annual Implementation Plan within the framework and the rules laid down by the Statutes and subsequent decisions adopted by the Governing Board and the Public Authorities Board,

| — | to prepare the Annual Activity Report and the Annual Accounts and balance sheets and submit them to the Governing Board for approval, |
| --- | --- |

—

to prepare the Annual Activity Report and the Annual Accounts and balance sheets and submit them to the Governing Board for approval,

| — | to present proposals on the internal functioning of the ENIAC Joint Undertaking to the Governing Board for approval, |
| --- | --- |

—

to present proposals on the internal functioning of the ENIAC Joint Undertaking to the Governing Board for approval,

| — | to present proposals on the rules of procedure for calls for proposals launched by the ENIAC Joint Undertaking, including the associated project proposal evaluation and selection process to the Public Authorities Board for approval, |
| --- | --- |

—

to present proposals on the rules of procedure for calls for proposals launched by the ENIAC Joint Undertaking, including the associated project proposal evaluation and selection process to the Public Authorities Board for approval,

| — | to manage the launch of calls for proposals, the process of evaluating and selecting project proposals and negotiating grant agreements for selected proposals, and the subsequent periodic monitoring and follow-up of Projects within the mandate given by the Public Authorities Board, |
| --- | --- |

—

to manage the launch of calls for proposals, the process of evaluating and selecting project proposals and negotiating grant agreements for selected proposals, and the subsequent periodic monitoring and follow-up of Projects within the mandate given by the Public Authorities Board,

| — | to conclude grant agreements for the implementation of the R&D activities, and service and supply contracts necessary for the operations of the ENIAC Joint Undertaking, |
| --- | --- |

—

to conclude grant agreements for the implementation of the R&D activities, and service and supply contracts necessary for the operations of the ENIAC Joint Undertaking,

| — | to authorise all payments due by the ENIAC Joint Undertaking, |
| --- | --- |

—

to authorise all payments due by the ENIAC Joint Undertaking,

| — | to establish and implement the necessary measures and actions for assessing the progress of the ENIAC Joint Undertaking towards achieving its objectives, including independent monitoring and auditing to assess the effectiveness and performance of the ENIAC Joint Undertaking, |
| --- | --- |

—

to establish and implement the necessary measures and actions for assessing the progress of the ENIAC Joint Undertaking towards achieving its objectives, including independent monitoring and auditing to assess the effectiveness and performance of the ENIAC Joint Undertaking,

| — | to organise Project reviews and technical audits for the assessment of research and development results, and to report to the Governing Board on the overall results, |
| --- | --- |

—

to organise Project reviews and technical audits for the assessment of research and development results, and to report to the Governing Board on the overall results,

| — | to carry out financial audits, directly or through the national public authorities, on Project participants as necessary, in compliance with the Financial Regulation of the ENIAC Joint Undertaking, |
| --- | --- |

—

to carry out financial audits, directly or through the national public authorities, on Project participants as necessary, in compliance with the Financial Regulation of the ENIAC Joint Undertaking,

| — | to negotiate the conditions for accession of new members of the ENIAC Joint Undertaking, on behalf of and within the mandate of the Governing Board, |
| --- | --- |

—

to negotiate the conditions for accession of new members of the ENIAC Joint Undertaking, on behalf of and within the mandate of the Governing Board,

| — | to carry out any other necessary action for the successful achievement of the ENIAC Joint Undertaking's objectives not provided for in the Annual Implementation Plan, within any limits and conditions established by the Governing Board, |
| --- | --- |

—

to carry out any other necessary action for the successful achievement of the ENIAC Joint Undertaking's objectives not provided for in the Annual Implementation Plan, within any limits and conditions established by the Governing Board,

| — | to convene meetings of the Governing Board and of the Public Authorities Board and where appropriate to attend these meetings as an observer, |
| --- | --- |

—

to convene meetings of the Governing Board and of the Public Authorities Board and where appropriate to attend these meetings as an observer,

| — | to provide the Governing Board with any information requested by it, |
| --- | --- |

—

to provide the Governing Board with any information requested by it,

| — | to submit to the Governing Board his/her proposal(s) concerning the organisation structure of the Secretariat, |
| --- | --- |

—

to submit to the Governing Board his/her proposal(s) concerning the organisation structure of the Secretariat,

| — | to be fully responsible for decisions on personnel management regarding the staff of the ENIAC Joint Undertaking, |
| --- | --- |

—

to be fully responsible for decisions on personnel management regarding the staff of the ENIAC Joint Undertaking,

| — | to perform risk assessment and risk management analysis and to propose to the Governing Board any insurance that it may be necessary for the ENIAC Joint Undertaking to take out in order to meet its obligations. |
| --- | --- |

—

to perform risk assessment and risk management analysis and to propose to the Governing Board any insurance that it may be necessary for the ENIAC Joint Undertaking to take out in order to meet its obligations.

6 –   External audit

Court of Auditors.

7 –   Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources available to the Joint Undertaking in 2010

Budget

Voted 2010 budget (EUR):

| | Commitments | Payments |
| --- | --- | --- |
| TITLE I - Staff | 1 136 000 | 1 136 000 |
| TITLE II – Administrative | 1 136 000 | 1 136 000 |
| TOTAL TITLES I & II | 2 272 000 | 2 272 000 |
| TITLE III – Operational | 36 168 000 | 36 168 000 |
| TOTAL TITLES I, II & III | 38 440 000 | 38 440 000 |

Commitments

Payments

TITLE I - Staff

1 136 000

1 136 000

TITLE II – Administrative

1 136 000

1 136 000

TOTAL TITLES I & II

2 272 000

2 272 000

TITLE III – Operational

36 168 000

36 168 000

TOTAL TITLES I, II & III

38 440 000

38 440 000

Staff at 31 December 2010

| | Establishment plan 2010 | Occupied at 31.12.2010 |
| --- | --- | --- |
| Temporary staff | 6 | 5 |
| Contract staff | 6 | 5 |
| Total Staff: | 12 | 10 |
| Allocated to: | | |
| — | Operational activities: |

Establishment plan 2010

Occupied at 31.12.2010

Temporary staff

6

5

Contract staff

6

5

Total Staff:

12

10

Allocated to:

—

Operational activities:

4

| — | Administrative tasks: |
| --- | --- |

—

Administrative tasks:

4

| — | Mixed tasks: |
| --- | --- |

—

Mixed tasks:

2

Activities and services provided in 2010

The ENIAC JU made great progress in 2010. Its membership did not change (1) but the engagement in the ENIAC JU bodies intensified, executing the tasks as defined in the Statutes:

| — | The Industry and Research Committee nominated by AENEAS to propose the Research Agenda has been extended to also include its Support Group, in addition to the members of its Steering Committee, who rarely (if ever) attended the meetings. The IRC has not yet adopted its rules of procedure; AENEAS continues to call and manage the meetings. |
| --- | --- |

—

The Industry and Research Committee nominated by AENEAS to propose the Research Agenda has been extended to also include its Support Group, in addition to the members of its Steering Committee, who rarely (if ever) attended the meetings. The IRC has not yet adopted its rules of procedure; AENEAS continues to call and manage the meetings.

| — | The Public Authorities Board approved the AWP, selected the projects to be funded in 2010 and worked on project selection rules and ‘delineation’ regarding CATRENE. Dissatisfied with the ‘delineation’, Germany and France voted against the 2010 AWP in January, and Germany abstained for the 2011 AWP in December 2010. |
| --- | --- |

—

The Public Authorities Board approved the AWP, selected the projects to be funded in 2010 and worked on project selection rules and ‘delineation’ regarding CATRENE. Dissatisfied with the ‘delineation’, Germany and France voted against the 2010 AWP in January, and Germany abstained for the 2011 AWP in December 2010.

| — | The Executive Director and the Secretariat enabled the ENIAC JU to acquire the capability to implement its own budget and execute the Annual Implementation Plan (2010 AIP). |
| --- | --- |

—

The Executive Director and the Secretariat enabled the ENIAC JU to acquire the capability to implement its own budget and execute the Annual Implementation Plan (2010 AIP).

| — | The Governing Board finished establishing the legal framework, and was required to reduce the time spent on administration and concentrate on policies. It is indeed high time to concentrate on policies, now that the ENIAC JU has acquired the capability to implement its budget and has started executing its tasks autonomously. To achieve this, it finished recruiting and training the staff, implemented the financial circuit, started accessing the appropriations for the functional activities (5 May 2010), implemented the Internal Control Framework, received the operational appropriations (22 September 2010), defined audit procedures, selected its new location in the White Atrium building, etc. |
| --- | --- |

—

The Governing Board finished establishing the legal framework, and was required to reduce the time spent on administration and concentrate on policies. It is indeed high time to concentrate on policies, now that the ENIAC JU has acquired the capability to implement its budget and has started executing its tasks autonomously. To achieve this, it finished recruiting and training the staff, implemented the financial circuit, started accessing the appropriations for the functional activities (5 May 2010), implemented the Internal Control Framework, received the operational appropriations (22 September 2010), defined audit procedures, selected its new location in the White Atrium building, etc.

At the end of the year, the ENIAC JU committed all appropriations for the projects arising from Call 3 (2010), executed 21,1 % of the operational payments and closed the functional budget with 1,92 million euro committed, as compared with a budget of 2,27 million euro; the savings of 352 000 euro will be credited to the Commission and to AENEAS in proportion to their respective contributions.

In addition, the ENIAC JU intensified its communication work: it published and distributed the brochure and the project profiles for Calls 1 and 2, updated the web site, co-organised the European Nanoelectronics Forum (Madrid), actively participated in events in Germany, Italy, Austria and Romania, and in international conferences such as ICT2010 (Brussels), DATE2010 (Dresden) and the Sematech Litho Workshop (New York). Although industrial companies continue pursuing sensible business goals, and they continue implementing strong national policies in semiconductors, if one takes an overall view of the results it becomes obvious that the European position in the global competition is deteriorating.

To stay competitive, Europe must raise its R&D and industrial programmes to a new level, as will hopefully be proposed by the High Level Group on Key Enabling Technologies. The main risk facing the ENIAC Joint Undertaking is that it will come to the end of its lifespan without having an impact on the evolution of the European semiconductor industry.

Realistically, Europe needs a comprehensive approach for putting its semiconductor industry back on the path towards growth, including – but going further than – the framework of the ENIAC JU. A European plan involving national support is a difficult proposition, as shown by the insufficient financial commitments of the key ENIAC member States. The ENIAC JU must however contribute to this goal by further improving its ability to mobilise the means made available by the budgetary authority and to make a difference.

To this end, the ENIAC JU must collaborate with all its stakeholders, pursuing three lines of action:

| — | work with AENEAS and the industry at large to generate compelling ‘must-do’ project proposals with strategic impact in line with the Research Agenda, |
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work with AENEAS and the industry at large to generate compelling ‘must-do’ project proposals with strategic impact in line with the Research Agenda,

| — | work with the National Public Authorities to improve the synergy with the policies pursued by the ENIAC Member States and optimise their financial engagement, |
| --- | --- |

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work with the National Public Authorities to improve the synergy with the policies pursued by the ENIAC Member States and optimise their financial engagement,

| — | engage additional public entities who can contribute to the programme at national level. |
| --- | --- |

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engage additional public entities who can contribute to the programme at national level.

If semiconductors are indeed a Key Enabling Technology in Europe, these goals should be achievable.

Source: Information supplied by the Joint Undertaking.

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(1)  The members of the ENIAC Joint Undertaking are: AENEAS, the European Commission and the ENIAC Member States (Austria, Belgium, the Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom).

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REPLIES OF THE JOINT UNDERTAKING

Presentation of the 2010 annual accounts

ENIAC JU agrees that a number of elements are missing in the final accounts and will pay special attention to enter the necessary corrections in the next years' accounts.

Paragraph 18

The accounting procedures and controls relating to the closure and to the recognition and measurement of the operational expenditure have been established and documented and will be fully implemented for the closure of the 2011 accounts.

Paragraph 19

Due to different methods used by some national authorities for the calculation of their contributions, data input has led at a certain point to differences in the payment of some pre-financings. The ENIAC JU has identified the gaps and corrective action has been taken.

Having regard to Article 66 of ENIAC JU's financial rules, the validation of any expenditure shall be based on the certification on the reality and the amount of the claim submitted by the respective national funding authorities. Moreover, the Joint Undertaking will carry out sample checks under its own responsibility. These checks will be carried out by the Joint Undertaking in future years to ensure the legality and regularity of the declared expenditure.

Paragraph 20

ENIAC JU is currently collecting the various national audit strategies and procedures as well as the ex-post audit results from ENIAC Member States, and will analyse with the internal auditor (IAS) the way to improve and review the JU's ex-post audit strategy.

Paragraph 21

While the financial and accounting systems (ABAC and SAP) have been validated in 2010, the management acknowledges that further work is needed for validating certain underlying business processes providing financial information. The validation of these processes will be finalised in 2011, having regard to the Commission's guidelines in this respect.

Paragraph 22

Due to the imminent move to new premises early 2011, ENIAC JU postponed in 2010 any plans to develop own software, to implement its data repository and relied on the Disaster Recovery Plan of the Commission, who provided the IT infrastructure.

Paragraph 24

The need to further clarify the role of the IAS in ENIAC JU's financial rules will be assessed after the finalisation of the ongoing revision of the Financial Regulation applicable to the general budget of the European Union.

Paragraph 25

ENIAC JU took the necessary steps for the signature of the Host State Agreement as it sent two copies of the agreement duly signed by the Executive Director to the Belgian authorities on 17 December 2010, inviting them to return one copy with their signature.

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