# Official Journal C 332/2011

| | ISSN 1977-091X
  doi:10.3000/1977091X.C_2011.332.eng |
| --- | --- |
| Official Journal
  of the European Union | C 332 |
| | |
| English edition | Information and Notices | Volume 5414 November 2011 |

ISSN 1977-091X

doi:10.3000/1977091X.C_2011.332.eng

Official Journal

of the European Union

C 332

English edition

Information and Notices

Volume 5414 November 2011

---

| Notice No | Contents | page |
| --- | --- | --- |
| | IV   Notices |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | European Commission |
| 2011/C 332/01 | Communication from the Commission to the European Parliament, the Council and the Court of Auditors — Annual accounts of the European Union — Financial year 2010 | 1 |
| 2011/C 332/02 | The Court’s Statement of assurance provided to the European Parliament and the Council — independent auditor’s report | 134 |

Notice No

Contents

page

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

2011/C 332/01

Communication from the Commission to the European Parliament, the Council and the Court of Auditors — Annual accounts of the European Union — Financial year 2010

1

2011/C 332/02

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

134

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

EN

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IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

| 14.11.2011 | EN | Official Journal of the European Union | C 332/1 |
| --- | --- | --- | --- |

14.11.2011

EN

Official Journal of the European Union

C 332/1

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

ANNUAL ACCOUNTS OF THE EUROPEAN UNION — FINANCIAL YEAR 2010

2011/C 332/01

CONTENTS

Note accompanying the consolidated accounts

| PART I: | Consolidated financial statements of the European Union and explanatory notes |
| --- | --- |

PART I:

Balance Sheet

Economic Outturn Account

Cashflow Table

Statement of changes in Net Assets

Notes to the financial statements

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

PART II:

Reports on implementation of the budget

Explanatory notes to the reports on implementation of the budget

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS

The consolidated annual accounts of the European Union for the year 2010 have been prepared on the basis of the information presented by the institutions and bodies under Article 129.2 of the Financial Regulation applicable to the general budget of the European Union. I hereby declare that they were prepared in accordance with Title VII of this Financial Regulation and with the accounting principles, rules and methods set out in the notes to the financial statements.

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

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

Philippe TAVERNE

Accounting Officer of the Commission

PART I

Consolidated financial statements of the European Union and explanatory notes

Consolidated financial statements of the European Union and explanatory notes

CONTENTS

Balance Sheet

Economic Outturn Account

Cashflow Table

Statement of changes in Net Assets

Notes to the financial statements:

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

1.

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

2.

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

3.

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

4.

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

5.

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

6.

| 7. | Financial risk management |
| --- | --- |

7.

| 8. | Related party disclosures |
| --- | --- |

8.

| 9. | Events after the balance sheet date |
| --- | --- |

9.

| 10. | Consolidated entities |
| --- | --- |

10.

| 11. | Non-consolidated entities |
| --- | --- |

11.

BALANCE SHEET

BALANCE SHEET

| EUR millions |
| --- |
| | Note | 31.12.2010 | 31.12.2009
  (restated) |
| NON-CURRENT ASSETS: |
| Intangible assets | 2.1 | 108 | 72 |
| Property, plant and equipment | 2.2 | 4 813 | 4 859 |
| Long-term investments | 2.3 | 2 555 | 2 379 |
| Loans | 2.4 | 11 640 | 10 764 |
| Long-term pre-financing | 2.5 | 44 118 | 41 544 |
| Long-term receivables | 2.6 | 40 | 55 |
| | | 63 274 | 59 673 |
| CURRENT ASSETS: |
| Inventories | 2.7 | 91 | 77 |
| Short-term investments | 2.8 | 2 331 | 1 791 |
| Short-term pre-financing | 2.9 | 10 078 | 9 436 |
| Short-term receivables | 2.10 | 13 501 | 8 958 |
| Cash and cash equivalents | 2.11 | 22 063 | 23 372 |
| | | 48 064 | 43 634 |
| TOTAL ASSETS | | 111 338 | 103 307 |
| NON-CURRENT LIABILITIES: |
| Employee benefits | 2.12 | (37 172) | (37 242) |
| Long-term provisions | 2.13 | (1 317) | (1 469) |
| Long-term financial liabilities | 2.14 | (11 445) | (10 559) |
| Other long-term liabilities | 2.15 | (2 104) | (2 178) |
| | | (52 038) | (51 448) |
| CURRENT LIABILITIES: |
| Short-term provisions | 2.16 | (214) | (213) |
| Short-term financial liabilities | 2.17 | (2 004) | (40) |
| Accounts payable | 2.18 | (84 529) | (93 884) |
| | | (86 747) | (94 137) |
| TOTAL LIABILITIES | | (138 785) | (145 585) |
| NET ASSETS | | (27 447) | (42 278) |
| Reserves | 2.19 | 3 484 | 3 323 |
| Amounts to be called from Member States (1) | 2.20 | (30 931) | (45 601) |
| NET ASSETS | | (27 447) | (42 278) |
| See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures |

EUR millions

Note

31.12.2010

31.12.2009

(restated)

NON-CURRENT ASSETS:

Intangible assets

2.1

2.1

108

72

Property, plant and equipment

2.2

2.2

4 813

4 859

Long-term investments

2.3

2.3

2 555

2 379

Loans

2.4

2.4

11 640

10 764

Long-term pre-financing

2.5

2.5

44 118

41 544

Long-term receivables

2.6

2.6

40

55

63 274

59 673

CURRENT ASSETS:

Inventories

2.7

2.7

91

77

Short-term investments

2.8

2.8

2 331

1 791

Short-term pre-financing

2.9

2.9

10 078

9 436

Short-term receivables

2.10

2.10

13 501

8 958

Cash and cash equivalents

2.11

2.11

22 063

23 372

48 064

43 634

TOTAL ASSETS

111 338

103 307

NON-CURRENT LIABILITIES:

Employee benefits

2.12

2.12

(37 172)

(37 242)

Long-term provisions

2.13

2.13

(1 317)

(1 469)

Long-term financial liabilities

2.14

2.14

(11 445)

(10 559)

Other long-term liabilities

2.15

2.15

(2 104)

(2 178)

(52 038)

(51 448)

CURRENT LIABILITIES:

Short-term provisions

2.16

2.16

(214)

(213)

Short-term financial liabilities

2.17

2.17

(2 004)

(40)

Accounts payable

2.18

2.18

(84 529)

(93 884)

(86 747)

(94 137)

TOTAL LIABILITIES

(138 785)

(145 585)

NET ASSETS

(27 447)

(42 278)

Reserves

2.19

2.19

3 484

3 323

Amounts to be called from Member States (1)

1

2.20

2.20

(30 931)

(45 601)

NET ASSETS

(27 447)

(27 447)

(42 278)

(42 278)

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures

2.5.2

2.9.2

2.10.3

3.4.1

ECONOMIC OUTTURN ACCOUNT

ECONOMIC OUTTURN ACCOUNT

| EUR millions |
| --- |
| | Note | 2010 | 2009
  (restated) |
| OPERATING REVENUE |
| Own resource and contributions revenue | 3.1 | 122 328 | 110 537 |
| Other operating revenue | 3.2 | 8 188 | 7 532 |
| | | 130 516 | 118 069 |
| OPERATING EXPENSES |
| Administrative expenses | 3.3 | (8 614) | (8 133) |
| Operating expenses | 3.4 | (103 764) | (102 504) |
| | | (112 378) | (110 637) |
| SURPLUS FROM OPERATING ACTIVITIES | | 18 138 | 7 432 |
| Financial revenue | 3.5 | 1 178 | 835 |
| Financial expenses | 3.6 | (661) | (594) |
| Movement in employee benefits liability | 2.12 | (1 003) | (683) |
| Share of net deficit of joint ventures & associates | 3.7 | (420) | (103) |
| ECONOMIC OUTTURN FOR THE YEAR | | 17 232 | 6 887 |
| See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures. |

EUR millions

Note

2010

2009

(restated)

OPERATING REVENUE

Own resource and contributions revenue

3.1

3.1

122 328

110 537

Other operating revenue

3.2

3.2

8 188

7 532

130 516

118 069

OPERATING EXPENSES

Administrative expenses

3.3

3.3

(8 614)

(8 133)

Operating expenses

3.4

3.4

(103 764)

(102 504)

(112 378)

(110 637)

SURPLUS FROM OPERATING ACTIVITIES

18 138

18 138

7 432

7 432

Financial revenue

3.5

3.5

1 178

835

Financial expenses

3.6

3.6

(661)

(594)

Movement in employee benefits liability

2.12

2.12

(1 003)

(683)

Share of net deficit of joint ventures & associates

3.7

3.7

(420)

(103)

ECONOMIC OUTTURN FOR THE YEAR

ECONOMIC OUTTURN FOR THE YEAR

17 232

6 887

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures.

2.5.2

2.9.2

2.10.3

3.4.1

CASHFLOW TABLE

CASHFLOW TABLE

| EUR millions |
| --- |
| | Note | 2010 | 2009
  (restated) |
| Economic outturn for the year | | 17 232 | 6 887 |
| Operating activities | 4.2 | | |
| Amortisation | | 28 | 22 |
| Depreciation | | 358 | 448 |
| (Reversal of) impairment losses on investments | | 0 | (17) |
| (Increase)/decrease in loans | | (876) | (7 199) |
| (Increase)/decrease in long-term pre-financing | | (2 574) | (12 521) |
| (Increase)/decrease in long-term receivables | | 15 | (10) |
| (Increase)/decrease in inventories | | (14) | 7 |
| (Increase)/decrease in short-term pre-financing | | (642) | 827 |
| (Increase)/decrease in short-term receivables | | (4 543) | 2 962 |
| Increase/(decrease) in long-term provisions | | (152) | 128 |
| Increase/(decrease) in long-term financial liabilities | | 886 | 7 210 |
| Increase/(decrease) in other long-term liabilities | | (74) | (48) |
| Increase/(decrease) in short-term provisions | | 1 | (134) |
| Increase/(decrease) in short-term financial liabilities | | 1 964 | (79) |
| Increase/(decrease) in accounts payable | | (9 355) | 4 207 |
| Prior year budgetary surplus taken as non cash revenue | | (2 254) | (1 796) |
| Other non-cash movements | | (149) | 54 |
| Increase/(decrease) in employee benefits liability | | (70) | (313) |
| Investing activities | 4.3 | | |
| (Increase)/decrease in intangible assets and property, plant and equipment | | (374) | (464) |
| (Increase)/decrease in long-term investments | | (176) | (284) |
| (Increase)/decrease in short-term investments | | (540) | (239) |
| NET CASHFLOW | | (1 309) | (352) |
| Net increase/(decrease) in cash and cash equivalents | | (1 309) | (352) |
| Cash and cash equivalents at the beginning of the year | 2.11 | 23 372 | 23 724 |
| Cash and cash equivalents at year-end | 2.11 | 22 063 | 23 372 |
| See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures. |

EUR millions

Note

2010

2009

(restated)

Economic outturn for the year

Economic outturn for the year

17 232

17 232

6 887

6 887

Operating activities

Operating activities

4.2

4.2

Amortisation

28

22

Depreciation

358

448

(Reversal of) impairment losses on investments

0

(17)

(Increase)/decrease in loans

(876)

(7 199)

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

(2 574)

(12 521)

(Increase)/decrease in long-term receivables

15

(10)

(Increase)/decrease in inventories

(14)

7

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

(642)

827

(Increase)/decrease in short-term receivables

(4 543)

2 962

Increase/(decrease) in long-term provisions

(152)

128

Increase/(decrease) in long-term financial liabilities

886

7 210

Increase/(decrease) in other long-term liabilities

(74)

(48)

Increase/(decrease) in short-term provisions

1

(134)

Increase/(decrease) in short-term financial liabilities

1 964

(79)

Increase/(decrease) in accounts payable

(9 355)

4 207

Prior year budgetary surplus taken as non cash revenue

(2 254)

(1 796)

Other non-cash movements

Other non-cash movements

(149)

54

Increase/(decrease) in employee benefits liability

Increase/(decrease) in employee benefits liability

(70)

(313)

Investing activities

Investing activities

4.3

4.3

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

(374)

(464)

(Increase)/decrease in long-term investments

(176)

(284)

(Increase)/decrease in short-term investments

(540)

(239)

NET CASHFLOW

NET CASHFLOW

(1 309)

(1 309)

(352)

(352)

Net increase/(decrease) in cash and cash equivalents

(1 309)

(352)

Cash and cash equivalents at the beginning of the year

2.11

2.11

23 372

23 724

Cash and cash equivalents at year-end

2.11

2.11

22 063

23 372

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures.

2.5.2

2.9.2

2.10.3

3.4.1

STATEMENT OF CHANGES IN NET ASSETS

STATEMENT OF CHANGES IN NET ASSETS

| EUR millions |
| --- |
| | Reserves (A) | Amounts to be called from Member States (B) | Net Assets = (A)+(B) |
| Fair value reserve | Other reserves | Accumulated Surplus/(Deficit) | Economic outturn of the year |
| BALANCE AS AT 31 DECEMBER 2008 | 41 | 3 074 | (63 225) | 12 686 | (47 424) |
| Movement in Guarantee Fund reserve | | 196 | (196) | | 0 |
| Fair value movements | 28 | | | | 28 |
| Other (restated) | | (1) | 28 | | 27 |
| Allocation of the economic outturn 2008 | | (15) | 12 701 | (12 686) | 0 |
| Budget result 2008 credited to Member States | | | (1 796) | | (1 796) |
| Economic outturn for the year (restated) | | | | 6 887 | 6 887 |
| BALANCE AS AT 31 DECEMBER 2009 (restated) | 69 | 3 254 | (52 488) | 6 887 | (42 278) |
| Movement in Guarantee Fund reserve | | 273 | (273) | | 0 |
| Fair value movements | (130) | | | | (130) |
| Other | | 4 | (21) | | (17) |
| Allocation of the economic outturn 2009 (restated) | | 14 | 6 873 | (6 887) | 0 |
| Budget result 2009 credited to Member States | | | (2 254) | | (2 254) |
| Economic outturn for the year | | | | 17 232 | 17 232 |
| BALANCE AS AT 31 DECEMBER 2010 | (61) | 3 545 | (48 163) | 17 232 | (27 447) |

EUR millions

Reserves (A)

Amounts to be called from Member States (B)

Net Assets = (A)+(B)

Fair value reserve

Other reserves

Accumulated Surplus/(Deficit)

Economic outturn of the year

BALANCE AS AT 31 DECEMBER 2008

BALANCE AS AT 31 DECEMBER 2008

41

41

3 074

3 074

(63 225)

(63 225)

12 686

12 686

(47 424)

(47 424)

Movement in Guarantee Fund reserve

196

(196)

0

Fair value movements

28

28

Other (restated)

(1)

28

27

Allocation of the economic outturn 2008

(15)

12 701

(12 686)

0

Budget result 2008 credited to Member States

(1 796)

(1 796)

Economic outturn for the year (restated)

6 887

6 887

BALANCE AS AT 31 DECEMBER 2009 (restated)

BALANCE AS AT 31 DECEMBER 2009 (restated)

69

69

3 254

3 254

(52 488)

(52 488)

6 887

6 887

(42 278)

(42 278)

Movement in Guarantee Fund reserve

273

(273)

0

Fair value movements

(130)

(130)

Other

4

(21)

(17)

Allocation of the economic outturn 2009 (restated)

14

6 873

(6 887)

0

Budget result 2009 credited to Member States

(2 254)

(2 254)

Economic outturn for the year

17 232

17 232

BALANCE AS AT 31 DECEMBER 2010

BALANCE AS AT 31 DECEMBER 2010

(61)

(61)

3 545

3 545

(48 163)

(48 163)

17 232

17 232

(27 447)

(27 447)

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

CONTENTS

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

1.

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

2.

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

3.

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

4.

| 5. | Contingent assets & liabilities and other disclosures |
| --- | --- |

5.

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

6.

| 7. | Financial risk management |
| --- | --- |

7.

| 8. | Related party disclosures |
| --- | --- |

8.

| 9. | Events after the balance sheet date |
| --- | --- |

9.

| 10. | Consolidated entities |
| --- | --- |

10.

| 11. | Non-consolidated entities |
| --- | --- |

11.

1.   SIGNIFICANT ACCOUNTING POLICIES

1.1.   LEGAL BASIS AND ACCOUNTING RULES

LEGAL BASIS AND ACCOUNTING RULES

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

In accordance with article 133 of the Financial Regulation, the European Union has prepared its 2010 consolidated financial statements on the basis of accrual-based accounting rules that are derived from International Public Sector Accounting Standards (IPSAS) or by default, International Financial Reporting Standards (IFRS). These accounting rules, adopted by the Accounting Officer of the Commission, have to be applied by all the institutions and EU bodies falling within the scope of consolidation in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements and consolidation. The accounts are kept in Euro on the basis of the calendar year.

1.2.   ACCOUNTING PRINCIPLES

ACCOUNTING PRINCIPLES

The objective of the financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of users. For the EU as a public sector, the objectives are more specifically to provide information useful for decision making, and to demonstrate the accountability of the entity for the resources entrusted to it. It is with these goals in mind that the present document has been drawn up. Article 124 of the Financial Regulation sets out the accounting principles to be applied in drawing up the financial statements:

| — | going concern basis; |
| --- | --- |

—

going concern basis;

| — | prudence; |
| --- | --- |

—

prudence;

| — | consistent accounting methods; |
| --- | --- |

—

consistent accounting methods;

| — | comparability of information; |
| --- | --- |

—

comparability of information;

| — | materiality; |
| --- | --- |

—

materiality;

| — | no netting; |
| --- | --- |

—

no netting;

| — | reality over appearance; |
| --- | --- |

—

reality over appearance;

| — | accrual-based accounting. |
| --- | --- |

—

accrual-based accounting.

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

1.3.   CONSOLIDATION

CONSOLIDATION

Scope of consolidation

Scope of consolidation

The consolidated financial statements of the EU comprise all significant controlled entities (institutions and agencies), associates and joint ventures, this being 43 controlled entities, 5 joint ventures and 4 associates. The complete list of consolidated entities can be found in note 10. In comparison with 2009, the scope of consolidation has been extended by 3 controlled entities (one institution, two agencies), one associate and one joint venture. The impact of the additions on the consolidated financial statements is not material.

10

Controlled entities

Controlled entities

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

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

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

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

Joint ventures

Joint ventures

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

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

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

Associates

Associates

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

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

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

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

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

The funds of the Sickness Insurance Scheme for staff of the European Union, the European Development Fund and the Participant's Guarantee Fund are managed by the Commission on their behalf, however since these entities are not controlled by the European Union they are therefore not consolidated in its accounts – see note 11 for further details on the amounts concerned.

11

1.4.   BASIS OF PREPARATION

BASIS OF PREPARATION

1.4.1.   
  Currency and basis for conversion

Currency and basis for conversion

Functional and reporting currency

Functional and reporting currency

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

Transactions and balances

Transactions and balances

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

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

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

EURO Exchange Rates

EURO Exchange Rates

| Currency | 31.12.2010 | 31.12.2009 |
| --- | --- | --- |
| BGN | 1,9558 | 1,9558 |
| CZK | 25,0610 | 26,4730 |
| DKK | 7,4535 | 7,4418 |
| EEK | 15,6466 | 15,6466 |
| GBP | 0,8607 | 0,8881 |
| HUF | 277,9500 | 270,4200 |
| LVL | 0,7094 | 0,7093 |
| LTL | 3,4528 | 3,4528 |
| PLN | 3,9750 | 4,1045 |
| RON | 4,2620 | 4,2363 |
| SEK | 8,9655 | 10,2520 |
| CHF | 1,2504 | 1,4836 |
| JPY | 108,6500 | 133,1600 |
| USD | 1,3362 | 1,4406 |

Currency

31.12.2010

31.12.2009

BGN

1,9558

1,9558

CZK

25,0610

26,4730

DKK

7,4535

7,4418

EEK

15,6466

15,6466

GBP

0,8607

0,8881

HUF

277,9500

270,4200

LVL

0,7094

0,7093

LTL

3,4528

3,4528

PLN

3,9750

4,1045

RON

4,2620

4,2363

SEK

8,9655

10,2520

CHF

1,2504

1,4836

JPY

108,6500

133,1600

USD

1,3362

1,4406

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

1.4.2.   
  Use of estimates

Use of estimates

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

1.5.   BALANCE SHEET

BALANCE SHEET

1.5.1.   
  Intangible assets

Intangible assets

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

1.5.2.   
  Property, plant and equipment

Property, plant and equipment

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

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

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

Depreciation rates

Depreciation rates

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

Type of asset

Straight line depreciation rate

Buildings

4 %

Plant, machinery and equipment

10 % to 25 %

Furniture

10 % to 25 %

Fixtures and fittings

10 % to 33 %

Vehicles

25 %

Computer hardware

25 %

Other tangible assets

10 % to 33 %

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

Leases

Leases

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

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

1.5.3.   
  Impairment of non-financial assets

Impairment of non-financial assets

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

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

1.5.4.   
  Investments

Investments

Participations in Associates and Joint Ventures

Participations in Associates and Joint Ventures

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

1.5.3

Investments in Venture Capital Funds

Investments in Venture Capital Funds

Classification and measurement

Classification and measurement

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

1.5.5

Fair value considerations

Fair value considerations

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

1.5.5.   
  Financial assets

Financial assets

Classification

Classification

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

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

Financial assets at fair value through profit or loss

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

(ii)   Loans and receivables

Loans and receivables

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

(iii)   Held-to-maturity investments

Held-to-maturity investments

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

(iv)   Available-for-sale financial assets

Available-for-sale financial assets

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

Initial recognition and measurement

Initial recognition and measurement

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

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

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

| — | The ‘market environment’ for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it can only borrow funds for the purpose of lending at the same rate (e.g. BOP) or a reduced rate compared to the commercial market (e.g. EFSM in 2011). This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost ‘option’ is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds. |
| --- | --- |

—

The ‘market environment’ for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it can only borrow funds for the purpose of lending at the same rate (e.g. BOP) or a reduced rate compared to the commercial market (e.g. EFSM in 2011). This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost ‘option’ is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds.

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

—

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

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

—

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

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

Subsequent measurement

Subsequent measurement

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

(i)

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

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

(ii)

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

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

(iii)

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

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

(iv)

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

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

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

Impairment of financial assets

Impairment of financial assets

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

(a)   Assets carried at amortised cost

Assets carried at amortised cost

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

(b)   Assets carried at fair value

Assets carried at fair value

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

1.5.6.   
  Inventories

Inventories

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

1.5.7.   
  Pre-financing amounts

Pre-financing amounts

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

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

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

1.5.8.   
  Receivables

Receivables

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

1.5.14

1.5.9.   
  Cash and cash equivalents

Cash and cash equivalents

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

1.5.10.   
  Employee benefits

Employee benefits

Pension obligations

Pension obligations

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

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

Post-employment sickness benefits

Post-employment sickness benefits

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

1.5.11.   
  Provisions

Provisions

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

1.5.12.   
  Financial liabilities

Financial liabilities

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

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

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

1.5.5.

1.5.13.   
  Payables

Payables

A significant amount of the payables of the EU are not related to the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding. They are recorded as payables for the requested amount when the cost claim is received and, after verification, accepted as eligible by the relevant financial agents. At this stage they are valued at the accepted and eligible amount.

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

1.5.14.   
  Accrued and deferred income and charges

Accrued and deferred income and charges

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

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

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

1.6.   ECONOMIC OUTTURN ACCOUNT

ECONOMIC OUTTURN ACCOUNT

1.6.1.   
  Revenue

Revenue

Non-exchange revenue

Non-exchange revenue

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

GNI based resources and VAT resources

GNI based resources and VAT resources

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

Traditional own resources

Traditional own resources

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

Fines

Fines

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

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

—

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

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

—

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

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

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

Exchange revenue

Exchange revenue

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

Interest income and expense

Interest income and expense

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

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

Dividend income

Dividend income

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

1.6.2.   
  Expenditure

Expenditure

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

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

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

1.7.   CONTINGENT ASSETS AND LIABILITIES

CONTINGENT ASSETS AND LIABILITIES

1.7.1.   
  Contingent assets

Contingent assets

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

1.7.2.   
  Contingent liabilities

Contingent liabilities

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

The accounting policies of the European Commission are the same as those applied by the European Union and are outlined in the note 1 of the consolidated annual accounts of the EU.

2.   NOTES TO THE BALANCE SHEET

NON CURRENT ASSETS

NON CURRENT ASSETS

2.1.   INTANGIBLE ASSETS

INTANGIBLE ASSETS

| EUR millions |
| --- |
| | Amount |
| Gross carrying amount at 31 December 2009 | 171 |
| Additions | 60 |
| Disposals | (2) |
| Other changes | 7 |
| Gross carrying amount at 31 December 2010 | 236 |
| Accumulated amortisation at 31 December 2009 | (99) |
| Amortisation charge for the year | (28) |
| Disposals | 1 |
| Other changes | (2) |
| Accumulated amortisation at 31 December 2010 | (128) |
| Net carrying amount at 31 December 2010 | 108 |
| Net carrying amount at 31 December 2009 | 72 |

EUR millions

Amount

Gross carrying amount at 31 December 2009

171

Additions

60

Disposals

(2)

Other changes

7

Gross carrying amount at 31 December 2010

Gross carrying amount at 31 December 2010

236

236

Accumulated amortisation at 31 December 2009

(99)

Amortisation charge for the year

(28)

Disposals

1

Other changes

(2)

Accumulated amortisation at 31 December 2010

Accumulated amortisation at 31 December 2010

(128)

(128)

Net carrying amount at 31 December 2010

Net carrying amount at 31 December 2010

108

108

Net carrying amount at 31 December 2009

Net carrying amount at 31 December 2009

72

72

The above amounts relate primarily to computer software.

2.2.   PROPERTY, PLANT & EQUIPMENT

PROPERTY, PLANT & EQUIPMENT

| EUR millions |
| --- |
| | Land and buildings | Plant and equipment | Furniture and vehicles | Computer hardware | Other tangible assets | Finance leases | Assets under construction | TOTAL |
| Gross carrying amount at 31 December 2009 | 3 972 | 460 | 215 | 475 | 182 | 2 655 | 231 | 8 190 |
| Additions | 47 | 44 | 20 | 42 | 15 | 10 | 114 | 292 |
| Disposals | (37) | (125) | (30) | (81) | (27) | (1) | — | (301) |
| Transfers between asset categories | (1) | 0 | 0 | 1 | 11 | 0 | (10) | 1 |
| Other changes | 46 | 113 | 21 | 46 | 33 | (1) | — | 258 |
| Gross carrying amount at 31 December 2010 | 4 027 | 492 | 226 | 483 | 214 | 2 663 | 335 | 8 440 |
| Accumulated depreciation at 31 December 2009 | (1 742) | (355) | (155) | (359) | (108) | (612) | | (3 331) |
| Depreciation charge for the year | (127) | (37) | (21) | (60) | (17) | (96) | | (358) |
| Depreciation written back | — | — | — | 2 | — | — | | 2 |
| Disposals | 31 | 122 | 27 | 77 | 27 | 0 | | 284 |
| Transfers between asset categories | 1 | 1 | 0 | 0 | (1) | 0 | | 1 |
| Other changes | (31) | (113) | (18) | (38) | (25) | 0 | | (225) |
| Accumulated depreciation at 31 December 2010 | (1 868) | (382) | (167) | (378) | (124) | (708) | | (3 627) |
| Net carrying amount at 31 December 2010 | 2 159 | 110 | 59 | 105 | 90 | 1 955 | 335 | 4 813 |
| Net carrying amount at 31 December 2009 | 2 230 | 105 | 60 | 116 | 74 | 2 043 | 231 | 4 859 |

EUR millions

Land and buildings

Plant and equipment

Furniture and vehicles

Computer hardware

Other tangible assets

Finance leases

Assets under construction

TOTAL

Gross carrying amount at 31 December 2009

3 972

460

215

475

182

2 655

231

8 190

Additions

47

44

20

42

15

10

114

292

Disposals

(37)

(125)

(30)

(81)

(27)

(1)

—

(301)

Transfers between asset categories

(1)

0

0

1

11

0

(10)

1

Other changes

46

113

21

46

33

(1)

—

258

Gross carrying amount at 31 December 2010

Gross carrying amount at 31 December 2010

4 027

4 027

492

492

226

226

483

483

214

214

2 663

2 663

335

335

8 440

8 440

Accumulated depreciation at 31 December 2009

(1 742)

(355)

(155)

(359)

(108)

(612)

(3 331)

Depreciation charge for the year

(127)

(37)

(21)

(60)

(17)

(96)

(358)

Depreciation written back

—

—

—

2

—

—

2

Disposals

31

122

27

77

27

0

284

Transfers between asset categories

1

1

0

0

(1)

0

1

Other changes

(31)

(113)

(18)

(38)

(25)

0

(225)

Accumulated depreciation at 31 December 2010

Accumulated depreciation at 31 December 2010

(1 868)

(1 868)

(382)

(382)

(167)

(167)

(378)

(378)

(124)

(124)

(708)

(708)

(3 627)

3 627

Net carrying amount at 31 December 2010

Net carrying amount at 31 December 2010

2 159

2 159

110

110

59

59

105

105

90

90

1 955

1 955

335

335

4 813

4 813

Net carrying amount at 31 December 2009

Net carrying amount at 31 December 2009

2 230

2 230

105

105

60

60

116

116

74

74

2 043

2 043

231

231

4 859

4 859

Charges still to be paid in respect of finance leases and similar entitlements are shown in long-term and short-term liabilities in the balance sheet (see also notes 2.15 and 2.18.1). They break down as follows:

2.15

2.18.1

FINANCE LEASES

FINANCE LEASES

| EUR millions |
| --- |
| Description | Cumulative charges (A) | Future amounts to be paid | Total Value | Subsequent expenditure on assets | Asset value | Depreciation | Net carrying amount |
| < 1 year | > 1 year | > 5 years | Total Liability (B) | A + B | (C) | A + B + C | (E) | = A + B + C + E |
| Land and buildings | 843 | 56 | 271 | 1 389 | 1 716 | 2 559 | 61 | 2 620 | (684) | 1 936 |
| Other tangible assets | 22 | 9 | 11 | 1 | 21 | 43 | 0 | 43 | (24) | 19 |
| Total at 31.12.2010 | 865 | 65 | 282 | 1 390 | 1 737 | 2 602 | 61 | 2 663 | (708) | 1 955 |
| Total at 31.12.2009 | 799 | 59 | 270 | 1 466 | 1 795 | 2 594 | 61 | 2 655 | (612) | 2 043 |

EUR millions

Description

Cumulative charges (A)

Future amounts to be paid

Total Value

Subsequent expenditure on assets

Asset value

Depreciation

Net carrying amount

< 1 year

> 1 year

> 5 years

Total Liability (B)

A + B

(C)

A + B + C

(E)

= A + B + C + E

Land and buildings

843

56

271

1 389

1 716

2 559

61

2 620

(684)

1 936

1 936

Other tangible assets

22

9

11

1

21

43

0

43

(24)

19

19

Total at 31.12.2010

865

65

282

1 390

1 737

2 602

61

2 663

(708)

1 955

Total at 31.12.2009

799

59

270

1 466

1 795

2 594

61

2 655

(612)

2 043

2.3.   LONG-TERM INVESTMENTS

LONG-TERM INVESTMENTS

| EUR millions |
| --- |
| | Note | 31.12.2010 | 31.12.2009 |
| Participations in Joint Ventures | 2.3.1 | 138 | 196 |
| Participations in Associates | 2.3.2 | 354 | 382 |
| Guarantee Fund | 2.3.3 | 1 346 | 1 240 |
| Available-for-Sale assets | 2.3.4 | 717 | 561 |
| Total Investments | | 2 555 | 2 379 |

EUR millions

Note

31.12.2010

31.12.2009

Participations in Joint Ventures

2.3.1

138

196

Participations in Associates

2.3.2

354

382

Guarantee Fund

2.3.3

1 346

1 240

Available-for-Sale assets

2.3.4

717

561

Total Investments

2 555

2 379

This heading covers investments made with a view to supporting the activities of the EU. It also includes the net assets of the Guarantee Fund.

2.3.1.   
  Participations in joint ventures

Participations in joint ventures

| EUR millions |
| --- |
| | GJU | SESAR | ITER | IMI | FCH | Total |
| Amount at 31.12.2009 | 0 | 80 | 35 | 81 | 0 | 196 |
| Contributions | 0 | 41 | 53 | 24 | 64 | 182 |
| Share of net result | 0 | (110) | (76) | (27) | (27) | (240) |
| Amount at 31.12.2010 | 0 | 11 | 12 | 78 | 37 | 138 |

EUR millions

GJU

SESAR

ITER

IMI

FCH

Total

Amount at 31.12.2009

0

80

35

81

0

196

Contributions

0

41

53

24

64

182

Share of net result

0

(110)

(76)

(27)

(27)

(240)

Amount at 31.12.2010

Amount at 31.12.2010

0

0

11

11

12

12

78

78

37

37

138

138

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

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Non-current assets | 176 | 48 |
| Current assets | 165 | 192 |
| Non-current liabilities | 0 | 0 |
| Current liabilities | (208) | (44) |
| Revenue | 7 | 72 |
| Expenses | (247) | (169) |

EUR millions

31.12.2010

31.12.2009

Non-current assets

176

48

Current assets

165

192

Non-current liabilities

0

0

Current liabilities

(208)

(44)

Revenue

7

72

Expenses

(247)

(169)

Galileo Joint Undertaking (GJU) in liquidation

Galileo Joint Undertaking (GJU) in liquidation

The Galileo Joint Undertaking (GJU) was put into liquidation at the end of 2006 and the process is still ongoing. As the entity was inactive and still undergoing liquidation in 2010, there were no revenues or expenditures incurred. The net assets of the GJU and thus the value of the investment at 31 December 2010 (and 31 December 2009) was EUR 0, being the investment of EUR 585 million less the accumulated share of losses, EUR 585 million.

SESAR Joint Undertaking

SESAR Joint Undertaking

The aim of this Joint Undertaking is to ensure the modernisation of the European air traffic management system and the rapid implementation of the European air traffic management Master Plan by coordinating and concentrating all relevant research and development efforts in the EU. At 31 December 2010, the Commission held 78,8 % or EUR 11 million of the ownership participation in SESAR. The total (indicative) Commission contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million.

ITER International Fusion Energy Organisation (ITER)

ITER International Fusion Energy Organisation (ITER)

ITER involves the European Union and China, India, Russia, Korea, Japan and USA. ITER was created to; manage the ITER facilities, to encourage the exploitation of the ITER facilities, to promote public understanding and acceptance of fusion energy, and to undertake any other activities that are necessary to achieve its purpose. The EU (Euratom) contribution to ITER International is given through the Fusion for Energy Agency, including also the contributions from Member States and from Switzerland. The total contribution is legally considered as a Euratom contribution to ITER since the Member States and Switzerland do not have ownership interests in ITER. As the EU legally holds the participation in the joint venture ITER International, the Commission must recognise the participation in its accounts.

At 31 December 2010, Euratom held 47,2 % or EUR 12 million of the ownership participation in ITER. The total (indicative) Euratom contribution foreseen for ITER (from 2007 to 2041) is EUR 7 649 million.

Joint Technology Initiatives

Joint Technology Initiatives

Public private partnerships in the form of Joint Technology Initiatives, which were implemented through Joint Undertakings within the meaning of Article 171 of the Treaty, have been created in order to implement the objectives of the Lisbon Growth and Jobs Agenda. During 2010 two new Joint Technology Initiatives became operational, the ENIAC Joint Undertaking and the FCH Joint Undertaking. Although ENIAC is legally referred to as a joint undertaking, from an accounting perspective it must be considered as an associate (and so is included as such in note 2.3.2) because the Commission has a significant influence, not joint control, over this entity (similar to the ARTEMIS and Clean Sky Joint Undertakings).

2.3.2

IMI Joint Technology Initiative on Innovative Medicines

IMI Joint Technology Initiative on Innovative Medicines

The IMI Joint Undertaking supports pre-competitive pharmaceutical research and development in the Member States and associated countries, aiming at increasing the research investment in the biopharmaceutical sector and promotes the involvement of small and medium-sized enterprises (SME) in its activities. The ownership interest of the European Union, represented by the Commission, is 97,4 % or EUR 78 million at 31 December 2010. The maximum indicative contribution of the Commission shall amount to EUR 1 billion up to 31.12.2017.

FCH Fuel Cells and Hydrogen Joint Undertaking

FCH Fuel Cells and Hydrogen Joint Undertaking

The objective of the FCH Joint Undertaking is to combine resources from the public and private sectors to strengthen research activities with a view to increasing the overall efficiency of European research efforts and accelerate the development and deployment of fuel cell and hydrogen technologies. The ownership interest of the European Union, represented by the Commission, is 99,9 % or EUR 37 million at 31 December 2010. The maximum indicative contribution of the EU shall amount to EUR 470 million up to 31.12.2017.

2.3.2.   
  Participations in Associates

Participations in Associates

| EUR millions |
| --- |
| | EIF | ARTEMIS | Clean Sky | ENIAC | Total |
| Amount at 31 December 2009 | 301 | 7 | 74 | 0 | 382 |
| Contributions | 14 | 19 | 101 | 30 | 164 |
| Share of net surplus/(deficit) | 2 | (12) | (161) | (9) | (180) |
| Other equity movements | (12) | 0 | 0 | 0 | (12) |
| Amount at 31 December 2010 | 305 | 14 | 14 | 21 | 354 |

EUR millions

EIF

ARTEMIS

Clean Sky

ENIAC

Total

Amount at 31 December 2009

301

7

74

0

382

Contributions

14

19

101

30

164

Share of net surplus/(deficit)

2

(12)

(161)

(9)

(180)

Other equity movements

(12)

0

0

0

(12)

Amount at 31 December 2010

Amount at 31 December 2010

305

305

14

14

14

14

21

21

354

354

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

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Assets | 447 | 420 |
| Liabilities | (93) | (38) |
| Revenue | 25 | 17 |
| Surplus/(Deficit) | (180) | (6) |

EUR millions

31.12.2010

31.12.2009

Assets

447

420

Liabilities

(93)

(38)

Revenue

25

17

Surplus/(Deficit)

(180)

(6)

European Investment Fund (EIF)

European Investment Fund (EIF)

The European Investment Fund (EIF) is the European Union's financial institution specialising in providing risk capital and guarantees to SMEs. At 31 December 2010, the Commission has subscribed for a total amount of EUR 900 million (out of EUR 3 000 million) of the share capital of the EIF. This represents 30 % of the total EIF share capital. EUR 2 million of the above amount concerns the result for 2010 (profit). No dividend was received in 2010. The Commission has paid in 20 %, the balance being uncalled corresponding to an amount of EUR 720 million.

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

EUR millions

EIF

Total EIF capital

Commission subscription

Total Share Capital

3 000

900

Paid-in

(600)

(180)

Uncalled

2 400

720

ARTEMIS Joint Undertaking

ARTEMIS Joint Undertaking

This entity was created to implement a Joint Technology Initiative with the private sector on Embedded Computing Systems. The ownership interest of the EU, represented by the Commission, at 31 December 2010 is 96,7 % or EUR 14 million. The maximum indicative contribution of the Commission shall amount to EUR 420 million.

Clean Sky Joint Undertaking

Clean Sky Joint Undertaking

The aim of this entity is to accelerate the development, validation and demonstration of clean air transport technologies in the EU and in particular to create a radically innovative Air Transport System with the target of reducing the environmental impact of air transport. The ownership interest of the European Union, represented by the Commission, is 64,7 % or EUR 14 million at 31 December 2010. The maximum indicative contribution of the Commission to this venture shall amount to EUR 800 million.

ENIAC Joint Undertaking

ENIAC Joint Undertaking

The aim of ENIAC is to define a commonly agreed research agenda in the field of nano-electronics in order to set research priorities for the development and adoption of key competences in that area. These objectives will be pursued by pooling resources from the public and private sectors to support R&D activities in the form of projects. The ownership interest of the European Union, represented by the Commission, is 97,8 % or EUR 21 million at 31 December 2010. The total commitment of the EU shall amount to EUR 450 million.

2.3.3.   
  Guarantee Fund

Guarantee Fund

Net assets of the Guarantee Fund

Net assets of the Guarantee Fund

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Available-for-sale assets | 1 154 | 1 050 |
| Cash and cash equivalents | 193 | 191 |
| Total assets | 1 347 | 1 241 |
| Total liabilities | (1) | (1) |
| Net assets | 1 346 | 1 240 |

EUR millions

31.12.2010

31.12.2009

Available-for-sale assets

1 154

1 050

Cash and cash equivalents

193

191

Total assets

1 347

1 241

Total liabilities

(1)

(1)

Net assets

Net assets

1 346

1 346

1 240

1 240

The Guarantee Fund for external actions covers loans guaranteed by the EU as a result of a Council Decision, in particular European Investment Bank (EIB) lending operations outside the EU and loans under macro-financial assistance (MFA) and Euratom loans outside the EU. It is a long-term instrument to cover any defaulting loans guaranteed by the EU and can therefore be seen as a long-term investment. This is evidenced by the fact that nearly 85 % of the available-for-sale assets have a maturity of between 1 and 10 years. The Fund is endowed by payments from the general budget of the EU equivalent to 9 % of the capital value of the operations, the proceeds from interest on investments made from the Fund's assets, and sums recovered from defaulting debtors for whom the Fund has had to activate its guarantee. Any yearly surplus arising shall be paid back as a revenue in the general budget of the EU.

The EU is required to include a guarantee reserve to cover loans to third countries. This reserve is intended to cover the requirements of the Guarantee Fund and, where necessary, activated guarantees exceeding the amount available in the Fund, so that these amounts may be charged to the budget. This reserve of EUR 1 746 million corresponds to the target amount of 9 % of the loans outstanding at 31 December 2010. The net assets of the Fund at 31 December 2010 total EUR 1 346 million. The difference between the net assets and the amount of the reserve corresponds to the amount to be paid by the EU budget to the Fund, i.e. EUR 400 million. Fair-value changes of the available-for-sale debt security portfolio have been recognised in equity in 2010 totalling a decrease of EUR 30 million (2009: increase of EUR 16 million).

2.3.4.   
  Available-for-sale assets (long-term)

Available-for-sale assets (long-term)

This includes investments and participations purchased to help beneficiaries develop their business activities.

Long-term Available-for-sale assets

Long-term Available-for-sale assets

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| European Bank for Reconstruction and Development | 188 | 157 |
| Risk Capital Operations | 137 | 132 |
| ETF Start up | 199 | 154 |
| European Fund for South East Europe | 102 | 96 |
| Green for Growth Fund | 20 | 20 |
| GEEREF | 56 | — |
| Progress Microfinance Facility | 14 | — |
| Other investments | 1 | 2 |
| Total | 717 | 561 |

EUR millions

31.12.2010

31.12.2009

European Bank for Reconstruction and Development

188

157

Risk Capital Operations

137

132

ETF Start up

199

154

European Fund for South East Europe

102

96

Green for Growth Fund

20

20

GEEREF

56

—

Progress Microfinance Facility

14

—

Other investments

1

2

Total

717

561

European Bank for Reconstruction and Development (EBRD)

European Bank for Reconstruction and Development (EBRD)

In May 2010, the Board of Governors approved an immediate increase in the authorised paid-in shares of EUR 1 billion. Payment for the paid-in shares issued was by way of a reallocation of net income previously allocated to surplus for other purposes, namely for the payment of such paid-in shares. As the EBRD is not quoted on any stock exchange and in view of the contractual restrictions included in the EBRD’s articles of incorporation relating, amongst others, to the sale of participating interests, capped at acquisition cost and only authorised to existing shareholders, the Commission's shareholding is valued at cost less any write-down for impairment.

The Commission has subscribed to 3 % of the EBRD's total capital of EUR 21 billion. At balance sheet date, the called up amount was EUR 187 million, which has been fully paid. Payments outstanding on non-called up capital amount to EUR 443 million.

| EUR millions |
| --- |
| EBRD | Total EBRD capital | Commission subscription |
| Total Share Capital | 20 793 | 630 |
| Paid-in | (6 197) | (187) |
| Uncalled | 14 596 | 443 |

EUR millions

EBRD

Total EBRD capital

Commission subscription

Total Share Capital

20 793

630

Paid-in

(6 197)

(187)

Uncalled

14 596

443

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

Risk Capital Operations

ETF start up covers the Growth & Employment programme, the MAP programme and the CIP programme, under the trusteeship of the EIF, supporting the creation and financing of start-up SMEs by investing in suitable specialised venture capital funds.

ETF start up

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

European Fund for South East Europe

The overall objective of the Green for Growth Fund (former Southeast Europe Energy Efficient Fund) is to enhance energy efficiency and fostering renewable energies in South East Europe through the provision of dedicated financing to businesses and households via partnering with financial institutions and direct finance.

Green for Growth Fund

A new investment of EUR 56 million was made relating to GEEREF. This is a new innovative fund providing global risk capital through private investment for energy efficiency and renewable energy projects in developing countries and economies in transition. There is also a new investment in 2010 of EUR 14 million in the Progress Microfinance Facility for employment and social inclusion.

GEEREF

Progress Microfinance Facility

At year-end, a further EUR 122 million relating to ETF Start up and SME Finance Facility had been committed to, but not yet been drawn down by the other parties.

2.4.   LOANS

LOANS

| EUR millions |
| --- |
| | Note | 31.12.2010 | 31.12.2009 |
| Loans granted from the EU budget & ECSC | 2.4.1 | 162 | 169 |
| Loans granted from borrowed funds | 2.4.2 | 11 478 | 10 595 |
| Total | 11 640 | 10 764 |

EUR millions

Note

31.12.2010

31.12.2009

Loans granted from the EU budget & ECSC

2.4.1

2.4.1

162

169

Loans granted from borrowed funds

2.4.2

2.4.2

11 478

10 595

Total

11 640

10 764

2.4.1.   
  Loans granted from the European Union budget & the ECSC in liquidation

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

| EUR millions |
| --- |
| | Loans with special conditions | ECSC housing loans | Total |
| Total at 31.12.2009 | 143 | 26 | 169 |
| New loans | 2 | — | 2 |
| Repayments | (16) | (5) | (21) |
| Changes in carrying amount | 11 | 1 | 12 |
| Total at 31.12.2010 | 140 | 22 | 162 |

EUR millions

Loans with special conditions

ECSC housing loans

Total

Total at 31.12.2009

143

26

169

New loans

2

—

2

Repayments

(16)

(5)

(21)

Changes in carrying amount

11

1

12

Total at 31.12.2010

140

22

162

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

2.4.2.   
  Loans granted from borrowed funds

Loans granted from borrowed funds

| EUR millions |
| --- |
| | MFA | Euratom loans | BOP | ECSC in liquidation | Total |
| Total at 31.12.2009 | 587 | 484 | 9 303 | 261 | 10 635 |
| New loans | — | — | 2 850 | — | 2 850 |
| Repayments | (84) | (17) | — | — | (101) |
| Exchange differences | — | 2 | — | 7 | 9 |
| Changes in carrying amount | — | — | 93 | (4) | 89 |
| Total at 31.12.2010 | 503 | 469 | 12 246 | 264 | 13 482 |
| Amount due < 1 year | — | — | 2 004 | — | 2 004 |
| Amount due > 1 year | 503 | 469 | 10 242 | 264 | 11 478 |

EUR millions

MFA

Euratom loans

BOP

ECSC in liquidation

Total

Total at 31.12.2009

587

484

9 303

261

10 635

New loans

—

—

2 850

—

2 850

Repayments

(84)

(17)

—

—

(101)

Exchange differences

—

2

—

7

9

Changes in carrying amount

—

—

93

(4)

89

Total at 31.12.2010

503

469

12 246

264

13 482

Amount due < 1 year

Amount due < 1 year

—

—

—

—

2 004

2 004

—

—

2 004

2 004

Amount due > 1 year

Amount due > 1 year

503

503

469

469

10 242

10 242

264

264

11 478

11 478

The effective interest rates (expressed as a range of interest rates) were as follows:

| Loans | 31.12.2010 | 31.12.2009 |
| --- | --- | --- |
| Macro Financial Assistance (MFA) | 0,99 %-4,54 % | 0,9625 %-4,54 % |
| Euratom | 0,96313 %-5,76 % | 1,071 %-5,76 % |
| BOP | 2,375 %-3,625 % | 3,125 %-3,625 % |
| ECSC in liquidation | 0,556 %-5,8103 % | 0,346 %-5,8103 % |

Loans

31.12.2010

31.12.2009

Macro Financial Assistance (MFA)

0,99 %-4,54 %

0,9625 %-4,54 %

Euratom

0,96313 %-5,76 %

1,071 %-5,76 %

BOP

2,375 %-3,625 %

3,125 %-3,625 %

ECSC in liquidation

0,556 %-5,8103 %

0,346 %-5,8103 %

Macro Financial Assistance (MFA) loans

Macro Financial Assistance (MFA) loans

MFA is a policy-based financial instrument of untied and undesignated balance-of-payment and/or budget support to partner third-countries geographically close to the EU territory. It takes the form of medium/long term loans or grants or an appropriate combination of both and generally complements financing provided in the context of an IMF-supported adjustment and reform program. At 31 December 2010, EUR 300 million of loan agreements have been entered into by the Commission but not yet drawn down by the other party before the year-end. The Commission has not received third-party guarantees for these loans, but they are guaranteed by the Guarantee Fund (see note 2.3.3).

2.3.3

Euratom loans

Euratom loans

Euratom is a legal entity of the EU and is represented by the European Commission. It grants loans to Member States for the purpose of financing investment projects in the Member States relating to the industrial production of electricity in nuclear power stations and to industrial fuel cycle installations. It also grants loans to non-Member States for improving the level of safety and efficiency of nuclear power stations and installations in the nuclear fuel cycle which are in service or under construction. Guarantees from third-parties of EUR 466 million (2009: EUR 481 million) have been received in respect of these loans.

Balance of Payment (BOP) loans

Balance of Payment (BOP) loans

The BOP facility, a policy based financial instrument, has been reactivated during the current economic and financial crisis to provide medium-term financial assistance to Member States of the EU. It enables the granting of loans to Member States which are experiencing, or are seriously threatened with, difficulties in their balance of payments or capital movements. Only Member States which have not adopted the Euro may benefit from this facility. The maximum outstanding amount of loans to be granted is EUR 50 billion. These loans are guaranteed by the EU general budget.

Between November 2008 and end 2010, loans amounting to EUR 14,6 billion were granted to Hungary, Latvia and Romania, of which EUR 12,05 billion have been disbursed by the end of 2010. The following table shows the disbursement and maturity dates for the different BOP loan instalments already disbursed:

| EUR millions |
| --- |
| | Hungary | Latvia | Romania | Total |
| Disbursed in 2008: |
| — | With maturity Nov. 2011 |

EUR millions

Hungary

Latvia

Romania

Total

Disbursed in 2008:

Disbursed in 2008:

—

With maturity Nov. 2011

2 000

—

—

2 000

Disbursed in 2009:

Disbursed in 2009:

| — | With maturity April 2014 |
| --- | --- |

—

With maturity April 2014

—

1 000

—

1 000

| — | With maturity Nov. 2014 |
| --- | --- |

—

With maturity Nov. 2014

2 000

—

—

2 000

| — | With maturity Jan. 2015 |
| --- | --- |

—

With maturity Jan. 2015

—

1 200

1 500

2 700

| — | With maturity April 2016 |
| --- | --- |

—

With maturity April 2016

1 500

—

—

1 500

Disbursed in 2010:

Disbursed in 2010:

| — | With maturity Sept. 2017 |
| --- | --- |

—

With maturity Sept. 2017

—

—

1 150

1 150

| — | With maturity May 2019 |
| --- | --- |

—

With maturity May 2019

—

500

1 000

1 500

| — | With maturity Oct. 2025 |
| --- | --- |

—

With maturity Oct. 2025

—

200

—

200

Loans disbursed at 31.12.10

Loans disbursed at 31.12.10

5 500

5 500

2 900

2 900

3 650

3 650

12 050

12 050

Total loans granted

6 500

3 100

5 000

14 600

Undrawn amounts at 31.12.10

Undrawn amounts at 31.12.10

Expired

Expired

200

200

1 350

1 350

1 550

1 550

It should be noted that the BOP assistance programme for Hungary expired in November 2010.

EFSM

EFSM

Since disbursements under the European Financial Stability Mechanism (‘EFSM’) only took place after 31 December 2010, the details on these loans are given in Note 9.

9

ECSC in liquidation loans

ECSC in liquidation loans

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

2.5.   LONG-TERM PRE-FINANCING

LONG-TERM PRE-FINANCING

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Pre-financing (see note 2.5.1) | 40 298 | 39 750 |
| Prepaid expenditure (see note 2.5.2) | 3 820 | 1 794 |
| Total Long-term Pre-financing | 44 118 | 41 544 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Pre-financing (see note 2.5.1)

2.5.1

40 298

39 750

Prepaid expenditure (see note 2.5.2)

2.5.2

3 820

1 794

Total Long-term Pre-financing

44 118

41 544

2.5.1.   
  Pre-financing

Pre-financing

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

Total pre-financing

Total pre-financing

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Long-term Pre-financing (see below) | 40 298 | 39 750 |
| Short-term Pre-financing (see note 2.9) | 9 123 | 9 077 |
| Total Pre-financing | 49 421 | 48 827 |

EUR millions

31.12.2010

31.12.2009

Long-term Pre-financing (see below)

40 298

39 750

Short-term Pre-financing (see note 2.9)

2.9

9 123

9 077

Total Pre-financing

49 421

48 827

Guarantees received in respect of pre-financing:

Guarantees received in respect of pre-financing:

These are guarantees that the European Commission in certain cases requests from beneficiaries when paying out advance payments (pre-financing). There are two values to disclose for this type of guarantee, the ‘nominal’ and the ‘on-going’ values. For the ‘nominal’ value, the generating event is linked to the existence of the guarantee. For the ‘on-going’ value, the guarantee’s generating event is the pre-financing payment and/or subsequent clearings. At 31 December 2010 the ‘nominal’ value of guarantees received in respect of pre-financing amounted to EUR 1 227 million while the ‘on-going’ value of those guarantees was EUR 1 059 million (2009: EUR 936 million and EUR 724 million respectively).

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF) – the amount of pre-financing paid out in 2010 totalled EUR 3,2 billion (2009: EUR 2,7 billion). This is a mutual benefit instrument set up to cover the financial risks incurred by the EU and the participants during the implementation of the indirect actions of FP7, its capital and interests constituting a performance security. All participants of indirect actions taking the form of a grant (and thus a pre-financing in the Commission's books) contribute 5 % of the total EU contribution to the PGF's capital for the duration of the action. As such the participants are the owners of the PGF, the EU (represented by the Commission) acting as their executive agent. At the end of an indirect action, participants shall recover their contribution to the capital in full, except where the PGF incurs losses due to defaulting beneficiaries – in this case participants shall recover, at a minimum, 80 % of their contribution. The PGF thus guarantees the financial interest of both the Commission and the participants. At 31 December 2010 EUR 866 million has been contributed to the PGF by the participants (2009: EUR 561 million) – see also note 11.

11

Long-term pre-financing

Long-term pre-financing

| EUR millions |
| --- |
| Management type | 31.12.2010 | 31.12.2009 |
| Direct centralised management | 1 695 | 1 148 |
| Indirect centralised management | 620 | 486 |
| Decentralised management | 441 | 347 |
| Shared management | 37 055 | 37 199 |
| Joint management | 487 | 568 |
| Implemented by other Institutions & Agencies | 0 | 2 |
| Total | 40 298 | 39 750 |

EUR millions

Management type

31.12.2010

31.12.2009

Direct centralised management

1 695

1 148

Indirect centralised management

620

486

Decentralised management

441

347

Shared management

37 055

37 199

Joint management

487

568

Implemented by other Institutions & Agencies

0

2

Total

40 298

39 750

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

2.5.2.   
  Prepaid expenditure

Prepaid expenditure

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Financial Engineering Instruments | 3 820 | 1 794 |
| Total | 3 820 | 1 794 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Financial Engineering Instruments

3 820

1 794

Total

3 820

1 794

Under the framework of the cohesion and rural development programmes 2007-2013, payments can be made from the EU Budget to Member States so as to contribute to Financial Engineering Instruments (be it in the form of loans, guarantees or equity investments) set up and managed under the responsibility of the Member State. However, the basic legal acts do not oblige the Member States to provide periodic reports to the Commission on the use of these funds. It has been noted that while such payments had, up to and including 2010, been originally accounted for as expenses in the Commission's accounting system,not all the monies have been used by the Instrument.It is, therefore more appropriate to classify them as assets on the balance sheet (prepaid expenditure).

It has also been noted that, given the intended purpose of these amounts, their use cannot be determined simply by examining a basic source of information like the account statements of the Instrument since, for example, the amounts used as guarantees remain blocked on the Instruments′ bank accounts and the loans reimbursed to the Instrument become available for new loans. Since the Member States are not required to report specifically on these funds, and since it would not be cost-effective for the Commission to collect such information itself, so as to properly reflect in the financial statements the use of these amounts during the programming period, it has been necessary to make estimations. The most reliable method available, and thus the approach used, is charging the expenses to the economic outturn account on a straight line basis over the programming period up to 31.12.2015, that being the last date when such expenditure is allowable.

To achieve this objective, the Commission requested the necessary information from Member States during early 2011 so as to estimate and then recognise the unused amounts on the balance sheet at 31 December 2010. This total amount is split between amounts that the Member States expect to use during 2011 (shown in note 2.9.2) and amounts that will be used after 2011, shown in the table above.

2.9.2

In accordance with the EU accounting rules, and internationally accepted accounting practice, since the above constitutes a change in accounting policy and the amounts concerned are material, the 2009 balance sheet has been restated in these financial statements so as to present comparable figures showing the situation as it would have looked had the same accounting treatment been followed last year. The impact on 2008 was estimated to be only EUR 18 million, and consequently this amount was adjusted against the accumulated deficit in 2009 and no restatement of the 2009 opening balance was made. The impact of this restatement on the original 2009 balance sheet is shown below:

| | 2009 balance sheet originally presented | Change in accounting policy | 2009 balance sheet restated |
| --- | --- | --- | --- |
| Long-term pre-financing: |
| Pre-financing | 39 750 | — | 39 750 |
| Pre-paid expenditure | — | 1 794 | 1 794 |
| | 39 750 | 1 794 | 41 544 |
| Short-term pre-financing: |
| Pre-financing | 9 077 | — | 9 077 |
| Pre-paid expenditure | — | 359 | 359 |
| | 9 077 | 359 | 9 436 |
| Short-term receivables: |
| Accrued income & deferred charges | 3 912 | 295 | 4 207 |
| Total assets | 100 859 | 2 448 | 103 307 |
| Total liabilities | (145 585) | — | (145 585) |
| Net Assets | (44 726) | 2 448 | (42 278) |
| Accumulated Result & Reserves |
| Reserves | 3 323 | — | 3 323 |
| Accumulated deficit | (52 506) | 18 | (52 488) |
| Result current year | 4 457 | 2 430 | 6 887 |
| | (44 726) | 2 448 | (42 278) |

2009 balance sheet originally presented

Change in accounting policy

2009 balance sheet restated

Long-term pre-financing:

Pre-financing

39 750

—

39 750

Pre-paid expenditure

—

1 794

1 794

39 750

1 794

41 544

Short-term pre-financing:

Pre-financing

9 077

—

9 077

Pre-paid expenditure

—

359

359

9 077

359

9 436

Short-term receivables:

Accrued income & deferred charges

3 912

295

4 207

Total assets

100 859

2 448

103 307

Total liabilities

(145 585)

—

(145 585)

Net Assets

Net Assets

(44 726)

(44 726)

2 448

2 448

(42 278)

(42 278)

Accumulated Result & Reserves

Accumulated Result & Reserves

Reserves

3 323

—

3 323

Accumulated deficit

(52 506)

18

(52 488)

Result current year

4 457

2 430

6 887

(44 726)

2 448

(42 278)

2.6.   LONG-TERM RECEIVABLES

LONG-TERM RECEIVABLES

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Member States | 14 | 26 |
| ECSC staff loans | 9 | 10 |
| Guarantees and deposits | 14 | 17 |
| Other | 3 | 2 |
| Total | 40 | 55 |

EUR millions

31.12.2010

31.12.2009

Member States

14

26

ECSC staff loans

9

10

Guarantees and deposits

14

17

Other

3

2

Total

40

55

Amounts to be received from Member States refer to amounts due to the ECSC in liquidation from former accession countries. From the total tong-term receivables EUR 14 million (2009: EUR 26 million) relates to non-exchange transactions.

CURRENT ASSETS

CURRENT ASSETS

2.7.   INVENTORIES

INVENTORIES

| EUR millions |
| --- |
| Description | 31.12.2010 | 31.12.2009 |
| Scientific materials | 71 | 62 |
| Other | 20 | 15 |
| Total | 91 | 77 |

EUR millions

Description

31.12.2010

31.12.2009

Scientific materials

71

62

Other

20

15

Total

91

77

2.8.   SHORT-TERM INVESTMENTS

SHORT-TERM INVESTMENTS

Short-term Available-for-sale assets

Short-term Available-for-sale assets

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| ECSC in liquidation | 1 283 | 1 483 |
| Risk Sharing Finance Facility | 419 | 244 |
| Loan Guarantee Instrument for TEN-T projects | 111 | 61 |
| BUFI investments | 515 | 0 |
| Other | 3 | 3 |
| Total | 2 331 | 1 791 |

EUR millions

31.12.2010

31.12.2009

ECSC in liquidation

1 283

1 483

Risk Sharing Finance Facility

419

244

Loan Guarantee Instrument for TEN-T projects

111

61

BUFI investments

515

0

Other

3

3

Total

2 331

1 791

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

Regarding the ECSC in liquidation amounts, all AFS investments are debt securities denominated in EUR and quoted in an active market. At 31 December 2010 debt securities (expressed at their fair value) reaching final maturity in the course of 2010 amount to EUR 294 million (2009: EUR 242 million).

While there have been acquisitions in both the Risk Sharing Finance Facility and the Loan Guarantee Instrument for TEN-T Projects (see also note 5.1.2), the large increase from the previous year is due mainly to the investment of provisionally cashed fines amounts in a specifically created fund managed by DG ECFIN (BUFI). In previous years, these amounts would have been held in specific bank accounts – see note 2.11, restricted cash.

5.1.2

2.11

2.9.   SHORT-TERM PRE-FINANCING

SHORT-TERM PRE-FINANCING

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Pre-financing (see note 2.9.1) | 9 123 | 9 077 |
| Prepaid expenditure (see note 2.9.2) | 955 | 359 |
| Total short-term pre-financing | 10 078 | 9 436 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Pre-financing (see note 2.9.1)

2.9.1

9 123

9 077

Prepaid expenditure (see note 2.9.2)

2.9.2

955

359

Total short-term pre-financing

10 078

9 436

2.9.1.   
  Pre-financing

Pre-financing

| EUR millions |
| --- |
| Management type | 31.12.2010 | 31.12.2009 |
| Direct centralised management | 3 038 | 2 924 |
| Indirect centralised management | 2 368 | 1 990 |
| Decentralised management | 536 | 700 |
| Shared management | 2 177 | 2 550 |
| Joint management | 894 | 832 |
| Implemented by other Institutions & Agencies | 110 | 81 |
| Total | 9 123 | 9 077 |

EUR millions

Management type

31.12.2010

31.12.2009

Direct centralised management

3 038

2 924

Indirect centralised management

2 368

1 990

Decentralised management

536

700

Shared management

2 177

2 550

Joint management

894

832

Implemented by other Institutions & Agencies

110

81

Total

9 123

9 077

The decrease in short-term pre-financing under shared management is due to the winding down of the Solidarity Fund. Although pre-financing instalments were paid in 2010 for new projects (programmes related to the period 2007-2013), they were classified under long-term assets as explained in note 2.5. The increase in short-term pre-financing under the indirect and direct centralised management type is due to the increased activities, mainly in the research and development fields.

2.5

2.9.2.   
  Prepaid expenditure

Prepaid expenditure

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Financial Engineering Instruments | 955 | 359 |
| Total | 955 | 359 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Financial Engineering Instruments

955

359

Total

955

359

As explained under note 2.5.2, these amounts relate to payments made to Member States under the framework of the cohesion and rural develoment programmes 2007-2013, so as to establish or contribute to Financial Engineering Instruments, but which have not yet been used by the instrument at year-end. The above amounts are expected to be used during 2011.

2.5.2

2.10.   SHORT-TERM RECEIVABLES

SHORT-TERM RECEIVABLES

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Loans and term deposits | 2 170 | 216 |
| Current receivables | 6 786 | 4 519 |
| Sundry receivables | 20 | 16 |
| Accrued income and deferred charges | 4 525 | 4 207 |
| Total | 13 501 | 8 958 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Loans and term deposits

2 170

216

Current receivables

6 786

4 519

Sundry receivables

20

16

Accrued income and deferred charges

4 525

4 207

Total

13 501

8 958

The total short-term receivables contain an estimated EUR 11 009 million (2009: 8 415 million) relating to non-exchange transactions.

2.10.1.   
  Loans and term deposits

Loans and term deposits

These amounts concern primarily BOP loans of EUR 2 004 million with remaining final maturities less than 12 months after the balance sheet date (see note 2.4 above). Also included under this heading are term deposits of EUR 166 million, primarily relating to the ECSC in liquidation.

2.4

2.10.2.   
  Current receivables

Current receivables

| EUR millions |
| --- |
| Account Group | At 31.12.2010 | At 31.12.2009 |
| Gross amount | Write down | Net Value | Gross amount | Write down | Net Value |
| Customers | 207 | (79) | 128 | 277 | (76) | 201 |
| Fines | 4 584 | (406) | 4 178 | 3 370 | (133) | 3 237 |
| Member States | 4 011 | (1 625) | 2 386 | 2 198 | (1 191) | 1 007 |
| Others | 96 | (2) | 94 | 76 | (2) | 74 |
| Total | 8 898 | (2 112) | 6 786 | 5 921 | (1 402) | 4 519 |

EUR millions

Account Group

At 31.12.2010

At 31.12.2009

Gross amount

Write down

Net Value

Gross amount

Write down

Net Value

Customers

207

(79)

128

277

(76)

201

Fines

4 584

(406)

4 178

3 370

(133)

3 237

Member States

4 011

(1 625)

2 386

2 198

(1 191)

1 007

Others

96

(2)

94

76

(2)

74

Total

8 898

(2 112)

6 786

5 921

(1 402)

4 519

Customers

Customers

These are recovery orders entered in the accounts at 31 December 2010 as established entitlements to be recovered and not already included under other headings on the assets side of the balance sheet.

Fines

Fines

This concerns amounts to be recovered relating to fines issued by the Commission. The increase in the write-down from last year is primarily explained by the reduction during 2011 of fines decided before 31 December 2010. Additionally, the write-down takes into account the fact that some new fines issued could not be, in the context of the economic and financial crisis, covered by provisional payments or bank guarantees. Guarantees totalling EUR 2 585 million had been received for the fines outstanding at 31 December 2010 (2009: EUR 2 952 million) in respect of these receivables. It should be noted that EUR 1 771 million of the above amounts were due for payment after 31 December 2010.

Receivables from Member States

Receivables from Member States

EAGF and Rural Development receivables

EAGF and Rural Development receivables

This item primarily covers the amounts owed by beneficiaries of EAGF at 31 December 2010, as declared and certified by the Member States at 15 October 2010, and less 20 % of the amount, which the Member States are allowed to retain to cover administrative costs. An estimation is made for the receivables arising after this declaration and up to 31 December 2010. The Commission also estimates a write-down for the amounts owed by beneficiaries that are unlikely to be recovered. The fact that such an adjustment is made does not mean that the Commission is waiving future recovery of these amounts. Please note also that the write-down method has been adjusted in 2010 with an impact on both income and expenditure which has a neutral effect on the net amount – see note 3.2.3. Following the new method, the receivables are booked for the nominal value and the value reduction is based on statistical analysis (recovery rate).

3.2.3

Own resources receivables

Own resources receivables

It should be noted that Member States are entitled to withhold 25 % of traditional own resources as collection costs, thus the above figures are shown net of this deduction. Based on the estimations sent by Member States, a write-down of EUR 811 million has been deducted from receivables from Member States. However, this does not mean that the Commission is waiving recovery of the amounts covered by this value adjustment.

Other receivables from Member States

Other receivables from Member States

Other receivables from Member States include EUR 30 million of recovery of expenses and EAGF advances of EUR 199 million compared to EUR 72 million and EUR 8 million respectively in 2009.

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| EAGF and Rural Development receivables |
| EAGF | 1 130 | 627 |
| TRDI | 19 | — |
| SAPARD | 146 | — |
| Write-down | (814) | (350) |
| Total | 481 | 277 |
| VAT paid and recoverable from Member States | 46 | 38 |
| Own resources |
| Established in the A account | 81 | 89 |
| Established in the separate account | 1 285 | 1 260 |
| Write-down | (811) | (841) |
| Other | 391 | 25 |
| Total | 946 | 533 |
| Other receivables from Member States | 913 | 159 |
| Total | 2 386 | 1 007 |

EUR millions

31.12.2010

31.12.2009

EAGF and Rural Development receivables

EAGF and Rural Development receivables

EAGF

1 130

627

TRDI

19

—

SAPARD

146

—

Write-down

(814)

(350)

Total

481

277

VAT paid and recoverable from Member States

VAT paid and recoverable from Member States

46

46

38

38

Own resources

Own resources

Established in the A account

81

89

Established in the separate account

1 285

1 260

Write-down

(811)

(841)

Other

391

25

Total

946

533

Other receivables from Member States

Other receivables from Member States

913

913

159

159

Total

2 386

1 007

2.10.3.   
  Accrued income and deferred charges

Accrued income and deferred charges

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009
  (Restated) |
| Accrued income | 3 445 | 3 655 |
| Deferred charges | 1 061 | 525 |
| Other | 19 | 27 |
| Total | 4 525 | 4 207 |

EUR millions

31.12.2010

31.12.2009

(Restated)

Accrued income

3 445

3 655

Deferred charges

1 061

525

Other

19

27

Total

4 525

4 207

The main amount under this heading is accrued income:

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Own resources | 2 657 | 2 209 |
| Agricultural assigned revenue Nov & Dec | 72 | 940 |
| EAGF: non-executed conformity correction decisions | 520 | 0 |
| Cohesion, Regional & Rural Development Funds: financial corrections | 43 | 404 |
| Other accrued income | 153 | 102 |
| Total accrued income | 3 445 | 3 655 |

EUR millions

31.12.2010

31.12.2009

Own resources

2 657

2 209

Agricultural assigned revenue Nov & Dec

72

940

EAGF: non-executed conformity correction decisions

520

0

Cohesion, Regional & Rural Development Funds: financial corrections

43

404

Other accrued income

153

102

Total accrued income

3 445

3 655

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

The most significant amounts included as deferred charges relate to funds transferred by Member States into Financial Engineering Instruments which were yet to be declared to or reimbursed by the Commission at year-end. At 31 December 2010 these amounted to EUR 858 million (2009: EUR 295 million). It should be noted that the amount for 2009 has been restated - see note 2.5.2 for more details. Also included under deferred charges are amounts totalling EUR 182 million of which the main amounts are anticipated payments of EUR 50 million paid under bilateral fisheries agreements with third countries, EUR 41 million for the European school and EUR 44 million for office rental.

2.5.2

2.11.   CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Unrestricted cash: |
| Accounts with Treasuries & Central Banks | 10 123 | 10 958 |
| Current accounts | 1 150 | 1 967 |
| Imprest accounts | 39 | 42 |
| Transfers (cash in transit) | 1 | 9 |
| Short-term deposits and other cash equivalents | 1 670 | 1 486 |
| Total | 12 983 | 14 462 |
| Restricted cash | 9 080 | 8 910 |
| Total | 22 063 | 23 372 |

EUR millions

31.12.2010

31.12.2009

Unrestricted cash:

Unrestricted cash:

Accounts with Treasuries & Central Banks

10 123

10 958

Current accounts

1 150

1 967

Imprest accounts

39

42

Transfers (cash in transit)

1

9

Short-term deposits and other cash equivalents

1 670

1 486

Total

12 983

14 462

Restricted cash

Restricted cash

9 080

9 080

8 910

8 910

Total

22 063

23 372

2.11.1.   
  Unrestricted cash

Unrestricted cash

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

Amounts shown as short-term deposits relate primarily to monies managed by fiduciaries on behalf of the EU for the purpose of implementing particular programmes funded by the EU budget. At year-end, EUR 131 million had been committed to, but not yet been drawn down by the other parties.

2.11.2.   
  Restricted cash

Restricted cash

Restricted cash refers to amounts received in connection with fines issued by the Commission for which the case is still open. These are kept in specific deposit accounts that are not used for any other activities.

NON CURRENT LIABILITIES

NON CURRENT LIABILITIES

2.12.   EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Pensions – Staff | 32 801 | 33 316 |
| Pensions – others | 840 | 663 |
| Joint Sickness Insurance Scheme | 3 531 | 3 263 |
| Total | 37 172 | 37 242 |

EUR millions

31.12.2010

31.12.2009

Pensions – Staff

32 801

33 316

Pensions – others

840

663

Joint Sickness Insurance Scheme

3 531

3 263

Total

37 172

37 242

2.12.1.   
  Pensions – Staff

Pensions – Staff

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

The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff at 31 December 2010 and on the rules of the Staff Regulations applicable at this date. This valuation was carried out in accordance with the methodology of IPSAS 25 (and therefore also EU accounting rule 12). The method used to calculate this liability is the projected unit credit method. The main actuarial assumptions available at the valuation date and used on the valuation were as follows:

| Actuarial Assumptions | 31.12.2010 | 31.12.2009 |
| --- | --- | --- |
| Nominal discount rate | 4,6 % | 4,5 % |
| Expected inflation rate | 2,1 % | 2,5 % |
| Real discount rate | 2,4 % | 2,0 % |
| Probability of marriage: Man/Woman | 84 %/38 % | 84 %/38 % |
| General Salary Growth/pension revaluation | 0 % | 0 % |
| 2008 International Civil Servants Life Table | Yes | Yes |

Actuarial Assumptions

31.12.2010

31.12.2009

Nominal discount rate

4,6 %

4,5 %

Expected inflation rate

2,1 %

2,5 %

Real discount rate

2,4 %

2,0 %

Probability of marriage: Man/Woman

84 %/38 %

84 %/38 %

General Salary Growth/pension revaluation

0 %

0 %

2008 International Civil Servants Life Table

Yes

Yes

Liabilities cover the rights previously defined for the following persons:

| 1. | Staff in active employment at 31.12.2010 in all Institutions and Agencies included in the scheme; |
| --- | --- |

1.

Staff in active employment at 31.12.2010 in all Institutions and Agencies included in the scheme;

| 2. | Staff in a deferred situation, i.e. who have temporally or definitively left the Institutions but leaving their pension rights in the pension scheme (and having accumulated at least 10 years of service); |
| --- | --- |

2.

Staff in a deferred situation, i.e. who have temporally or definitively left the Institutions but leaving their pension rights in the pension scheme (and having accumulated at least 10 years of service);

| 3. | Former officials and other servants benefiting from a retirement pension; |
| --- | --- |

3.

Former officials and other servants benefiting from a retirement pension;

| 4. | Former officials and other servants benefiting from a invalidity pension; |
| --- | --- |

4.

Former officials and other servants benefiting from a invalidity pension;

| 5. | Former officials and other servants benefiting from an invalidity allowance; |
| --- | --- |

5.

Former officials and other servants benefiting from an invalidity allowance;

| 6. | The recipients of a survivor pension (widows or widowers, orphans, dependants). |
| --- | --- |

6.

The recipients of a survivor pension (widows or widowers, orphans, dependants).

The principal points to note are (see also table below for main movements):

| — | The gross actuarial liability was valued at EUR 36 639 million at 31 December 2010 (2009: EUR 37 215 million). Added to this is a co-efficient corrector effect of EUR 1 063 million (2009: EUR 1 079 million). Taxes payable by beneficiaries are deducted from the total gross liability to arrive at the net liability included on the balance sheet (since tax is deducted on the payment of pensions and credited to the EU's revenue in the year of payment.) This net liability (gross liability less taxes) at 31 December 2010 has thus been estimated at EUR 32 801 million. |
| --- | --- |

—

The gross actuarial liability was valued at EUR 36 639 million at 31 December 2010 (2009: EUR 37 215 million). Added to this is a co-efficient corrector effect of EUR 1 063 million (2009: EUR 1 079 million). Taxes payable by beneficiaries are deducted from the total gross liability to arrive at the net liability included on the balance sheet (since tax is deducted on the payment of pensions and credited to the EU's revenue in the year of payment.) This net liability (gross liability less taxes) at 31 December 2010 has thus been estimated at EUR 32 801 million.

| — | The number of members of the staff pension scheme increased by 1 578 individuals. |
| --- | --- |

—

The number of members of the staff pension scheme increased by 1 578 individuals.

2.12.2.   
  Pensions – Others

Pensions – Others

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

2.12.3.   
  Joint Sickness Insurance Scheme

Joint Sickness Insurance Scheme

A valuation is also made for the estimated liability that the EU has regarding its contributions to the Joint Sickness Insurance Scheme in relation to its retired staff. The gross liability has been valued at EUR 3 791 million and plan assets of EUR 260 million are deducted from the gross liability to arrive at the net amount. The discount rate and the general salary growth used in the calculation are the same as those used in the staff pension valuation.

Movement in Gross Employee Benefits liability

Movement in Gross Employee Benefits liability

| EUR millions |
| --- |
| | Staff pension liability | Sickness Insurance |
| Gross Liability at 31 December 2009 | 37 215 | 3 535 |
| Service/normal cost | 1 331 | 188 |
| Interest cost | 1 709 | 169 |
| Benefits paid | (1 131) | (95) |
| Actuarial gains | (2 566) | (6) |
| Change due to newcomers | 81 | — |
| Gross Liability at 31 December 2010 | 36 639 | 3 791 |

EUR millions

Staff pension liability

Sickness Insurance

Gross Liability at 31 December 2009

37 215

3 535

Service/normal cost

1 331

188

Interest cost

1 709

169

Benefits paid

(1 131)

(95)

Actuarial gains

(2 566)

(6)

Change due to newcomers

81

—

Gross Liability at 31 December 2010

Gross Liability at 31 December 2010

36 639

36 639

3 791

3 791

2.13.   LONG-TERM PROVISIONS

LONG-TERM PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2009 | Additional provisions | Unused amounts reversed | Amounts used | Transfer to short-term | Change in estimation | Amount at 31.12.2010 |
| Legal cases | 413 | 30 | (136) | (1) | 0 | 0 | 306 |
| Nuclear site dismantlement | 908 | 0 | 0 | (3) | (21) | 21 | 905 |
| Financial | 76 | 38 | 0 | 0 | (30) | 2 | 86 |
| Other | 72 | 18 | (9) | (55) | (6) | 0 | 20 |
| Total | 1 469 | 86 | (145) | (59) | (57) | 23 | 1 317 |

EUR millions

Amount at 31.12.2009

Additional provisions

Unused amounts reversed

Amounts used

Transfer to short-term

Change in estimation

Amount at 31.12.2010

Legal cases

413

30

(136)

(1)

0

0

306

Nuclear site dismantlement

908

0

0

(3)

(21)

21

905

Financial

76

38

0

0

(30)

2

86

Other

72

18

(9)

(55)

(6)

0

20

Total

1 469

86

(145)

(59)

(57)

23

1 317

Legal cases

Legal cases

This is the estimate of amounts that will probably have to be paid out after 2011 in relation to a number of ongoing legal cases. The largest portion, EUR 300 million, concerns court cases pending at 31 December 2010 in relation to financial corrections for EAGF and other court cases concerning agricultural expenditure.

Nuclear site dismantlement

Nuclear site dismantlement

In 2008 a consortium of independent experts made an update of their 2003 study into the estimated costs of the decommissioning of the JRC nuclear facilities and waste management programme. Their revised estimate of EUR 1 222 million (previously EUR 1 145 million) is taken as the basis for the provision to be included in the financial statements. In accordance with the EU accounting rules, this estimate is indexed for inflation and then discounted to its net present value (using the Euro zero-coupon swap curve). At 31 December 2010, this resulted in a total provision of EUR 926 million split between amounts expected to be paid in 2011 (EUR 21 million) and afterwards (EUR 905 million). In view of the estimated duration of this programme (around 20 years), it should be pointed out that there is some uncertainty about this estimate, and the final cost could be different from the amounts currently entered.

Financial provisions

Financial provisions

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

Other provisions

Other provisions

The main amount here concerns the estimates of the EU’s contributions to various Member States under the Emergency Veterinary Fund for certain animal disease outbreaks, totalling EUR 12 million (2009: EUR 60 million) split between amounts expected to be settled in 2011 (EUR 10 million) and later (EUR 2 million).

2.14.   LONG-TERM FINANCIAL LIABILITIES

LONG-TERM FINANCIAL LIABILITIES

| EUR millions |
| --- |
| | MFA | Euratom loans | BOP | ECSC in liquidation | Total |
| Total at 31.12.2009 | 587 | 484 | 9 303 | 225 | 10 599 |
| New borrowings | — | — | 2 850 | — | 2 850 |
| Repayments | (84) | (17) | — | — | (101) |
| Exchange differences | — | 2 | — | 6 | 8 |
| Changes in carrying amount | — | — | 93 | — | 93 |
| Total at 31.12.2010 | 503 | 469 | 12 246 | 231 | 13 449 |
| Amount due < 1 year | — | — | 2 004 | — | 2 004 |
| Amount due > 1 year | 503 | 469 | 10 242 | 231 | 11 445 |

EUR millions

MFA

Euratom loans

BOP

ECSC in liquidation

Total

Total at 31.12.2009

587

484

9 303

225

10 599

New borrowings

—

—

2 850

—

2 850

Repayments

(84)

(17)

—

—

(101)

Exchange differences

—

2

—

6

8

Changes in carrying amount

—

—

93

—

93

Total at 31.12.2010

503

469

12 246

231

13 449

Amount due < 1 year

Amount due < 1 year

—

—

2 004

—

2 004

Amount due > 1 year

Amount due > 1 year

503

503

469

469

10 242

10 242

231

231

11 445

11 445

This heading includes borrowings due by the European Union maturing in over one year. Borrowings include debts evidenced by certificates amounting to EUR 13 211 million (2009: EUR 10 324 million). The changes in carrying amount correspond to the change in accrued interests.

The effective interest rates (expressed as a range of interest rates) were as follows:

| Borrowings | 31.12.2010 | 31.12.2009 |
| --- | --- | --- |
| Macro Financial Assistance (MFA) | 0,99 %-4,54 % | 0,9625 %-4,54 % |
| Euratom | 0,987 %-5,6775 % | 0,9031 %-5,6775 % |
| BOP | 2,375 %-3,625 % | 3,125 %-3,625 % |
| ECSC in liquidation | 0,556 %-9,2714 % | 0,346 %-9,2714 % |

Borrowings

31.12.2010

31.12.2009

Macro Financial Assistance (MFA)

0,99 %-4,54 %

0,9625 %-4,54 %

Euratom

0,987 %-5,6775 %

0,9031 %-5,6775 %

BOP

2,375 %-3,625 %

3,125 %-3,625 %

ECSC in liquidation

0,556 %-9,2714 %

0,346 %-9,2714 %

2.15.   OTHER LONG-TERM LIABILITIES

OTHER LONG-TERM LIABILITIES

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Finance Leasing debts | 1 672 | 1 736 |
| Buildings paid for in instalments | 382 | 395 |
| Other | 50 | 47 |
| Total | 2 104 | 2 178 |

EUR millions

31.12.2010

31.12.2009

Finance Leasing debts

1 672

1 736

Buildings paid for in instalments

382

395

Other

50

47

Total

2 104

2 178

This item covers primarily leasing liabilities due in more than one year (see note 2.2 above). Also included are amounts relating to certain buildings that the Commission bought where the purchase price will be paid off in instalments - these are not leasing contracts since title passed to the Commission immediately.

2.2

CURRENT LIABILITIES

CURRENT LIABILITIES

2.16.   SHORT-TERM PROVISIONS

SHORT-TERM PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2009 | Additional provisions | Unused amounts reversed | Amounts used | Transfers from long term | Change in estimation | Amount at 31.12.2010 |
| Legal cases | 30 | 7 | (7) | (1) | 0 | 0 | 29 |
| Nuclear site dismantlement | 22 | 0 | 0 | (22) | 21 | 0 | 21 |
| Financial | 128 | 21 | (3) | (38) | 30 | 2 | 140 |
| Other | 33 | 10 | (5) | (20) | 6 | 0 | 24 |
| Total | 213 | 38 | (15) | (81) | 57 | 2 | 214 |

EUR millions

Amount at 31.12.2009

Additional provisions

Unused amounts reversed

Amounts used

Transfers from long term

Change in estimation

Amount at 31.12.2010

Legal cases

30

7

(7)

(1)

0

0

29

Nuclear site dismantlement

22

0

0

(22)

21

0

21

Financial

128

21

(3)

(38)

30

2

140

Other

33

10

(5)

(20)

6

0

24

Total

213

38

(15)

(81)

57

2

214

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

2.17.   SHORT-TERM FINANCIAL LIABILITIES

SHORT-TERM FINANCIAL LIABILITIES

This heading includes BOP borrowings of EUR 2 004 million (see note 2.14) that mature during the 12 months following the balance sheet date (2009: EUR 40 million relating to MFA).

2 004 million

2.14

2.18.   ACCOUNTS PAYABLE

ACCOUNTS PAYABLE

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Current portion of long-term liabilities | 78 | 71 |
| Current payables | 17 615 | 15 260 |
| Sundry payables | 97 | 133 |
| Accrued charges and deferred income | 66 739 | 78 420 |
| Total | 84 529 | 93 884 |

EUR millions

31.12.2010

31.12.2009

Current portion of long-term liabilities

78

71

Current payables

17 615

15 260

Sundry payables

97

133

Accrued charges and deferred income

66 739

78 420

Total

84 529

93 884

2.18.1.   
  Current portion of long-term liabilities

Current portion of long-term liabilities

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Finance leasing liabilities | 65 | 59 |
| Other | 13 | 12 |
| Total | 78 | 71 |

EUR millions

31.12.2010

31.12.2009

Finance leasing liabilities

65

59

Other

13

12

Total

78

71

2.18.2.   
  Current payables

Current payables

| EUR millions |
| --- |
| Type | 31.12.2010 | 31.12.2009 |
| Member States | 17 035 | 14 903 |
| Suppliers and other | 1 292 | 944 |
| Estimated non-eligible amounts | (712) | (587) |
| Total | 17 615 | 15 260 |

EUR millions

Type

31.12.2010

31.12.2009

Member States

17 035

14 903

Suppliers and other

1 292

944

Estimated non-eligible amounts

(712)

(587)

Total

17 615

15 260

Current payables include cost statements received by the EU under the framework of the grant activities. They are credited for the amount being claimed from the moment the demand is received. If the counterpart is a Member State, they are classified as such. It is the same procedure for invoices and credit notes received under procurement activities. The cost claims concerned have been taken into account for the year-end cut off procedures. Following these cut off entries, estimated eligible amounts have therefore been recorded as accrued charges (see note 2.18.3 below), while the non-eligible parts remain open on the ‘Estimated non-eligible amounts’ accounts. In order not to overestimate assets and liabilities, it was decided to present the net amount under current liabilities.

2.18.3

Member States

Member States

The primary amounts here relate to EUR 16 924 million (2009: EUR 11 160 million) in unpaid cost claims for Structural Fund actions.

Suppliers and other

Suppliers and other

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

Estimated non-eligible amounts

Estimated non-eligible amounts

Payables are reduced by EUR 712 million, being that part of the requests for reimbursement received, but not yet checked, that was considered to be ineligible. The largest amounts concern the Structural Actions DGs.

2.18.3.   
  Accrued charges and deferred income

Accrued charges and deferred income

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Accrued charges | 66 326 | 76 435 |
| Deferred income | 407 | 1 976 |
| Other | 6 | 9 |
| Total | 66 739 | 78 420 |

EUR millions

31.12.2010

31.12.2009

Accrued charges

66 326

76 435

Deferred income

407

1 976

Other

6

9

Total

66 739

78 420

The split of accrued charges is as follows:

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| EAGF accrued charges: |
| Expenses 16/10/2010 to 31/12/2010 | 33 015 | 32 087 |
| Direct Aid | 10 703 | 12 195 |
| Sugar restructuring | 400 | 735 |
| Others | (303) | (55) |
| Total EAGF: | 43 815 | 44 962 |
| Structural Actions accrued charges: |
| EAFRD & EAGGF-G | 10 792 | 9 076 |
| EFF | 116 | 347 |
| ERDF & innovative actions | 3 337 | 11 777 |
| Cohesion fund | 1 557 | 980 |
| ISPA | 74 | 3 |
| ESF | 2 182 | 5 411 |
| Total Structural Actions: | 18 058 | 27 594 |
| Other accrued charges: |
| R&D | 1 267 | 1 687 |
| Other | 3 186 | 2 192 |
| Total Others: | 4 453 | 3 879 |
| Total accrued charges | 66 326 | 76 435 |

EUR millions

31.12.2010

31.12.2009

EAGF accrued charges:

EAGF accrued charges:

Expenses 16/10/2010 to 31/12/2010

33 015

32 087

Direct Aid

10 703

12 195

Sugar restructuring

400

735

Others

(303)

(55)

Total EAGF:

43 815

44 962

Structural Actions accrued charges:

Structural Actions accrued charges:

EAFRD & EAGGF-G

10 792

9 076

EFF

116

347

ERDF & innovative actions

3 337

11 777

Cohesion fund

1 557

980

ISPA

74

3

ESF

2 182

5 411

Total Structural Actions:

18 058

27 594

Other accrued charges:

Other accrued charges:

R&D

R&D

1 267

1 687

Other

Other

3 186

2 192

Total Others:

4 453

3 879

Total accrued charges

66 326

76 435

There is a general trend of decreasing expenditure for the Structural Actions, due to the fact that the 2000-2006 programmes are now in the closing phase.

The large amount of deferred income at 31 December 2009 was due to the advance payment of 2010 own resources contributions by two Member States.

NET ASSETS & RESERVES

NET ASSETS & RESERVES

2.19.   RESERVES

RESERVES

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Fair value reserve | (61) | 69 |
| Other reserves: |
| Guarantee Fund | 1 746 | 1 472 |
| Revaluation reserve | 57 | 57 |
| Borrowing and lending activities | 1 525 | 1 511 |
| Other | 217 | 214 |
| Total | 3 545 | 3 254 |
| Total | 3 484 | 3 323 |

EUR millions

31.12.2010

31.12.2009

Fair value reserve

(61)

(61)

69

69

Other reserves:

Guarantee Fund

1 746

1 472

Revaluation reserve

57

57

Borrowing and lending activities

1 525

1 511

Other

217

214

Total

3 545

3 254

Total

3 484

3 323

2.19.1.   
  Fair value reserve

Fair value reserve

In accordance with the accounting rules, the adjustment to fair value of available-for-sale assets is accounted for through the fair value reserve. In 2010 amounts of EUR 48 million have been taken out of the fair value reserve and recognised in the economic outturn account relating to available-for-sale assets.

2.19.2.   
  Other reserves

Other reserves

Guarantee Fund

Guarantee Fund

See also note 2.3.3 concerning the operation of the Guarantee Fund. This reserve reflects the 9 % target amount of the outstanding amounts guaranteed by the Fund that is required to be kept as assets.

2.3.3

Revaluation reserve

Revaluation reserve

The revaluation reserve comprises the revaluations of property, plant and equipment. The balance at the year-end of EUR 57 million relates to a revaluation of Commission land and buildings, which had already occurred before the transition to the new accounting rules.

Borrowing and lending activities reserve

Borrowing and lending activities reserve

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

2.20.   AMOUNTS TO BE CALLED FROM MEMBER STATES

AMOUNTS TO BE CALLED FROM MEMBER STATES

| EUR millions |
| --- |
| | Amount |
| Amounts to be called from Member States at 31 December 2009 (restated) | 45 601 |
| Return of 2009 budget surplus to Member States | 2 254 |
| Movement in Guarantee Fund reserve | 273 |
| Other reserve movements | 21 |
| ECSC in liquidation: transfer 2009 result to reserves | 14 |
| Economic outturn (surplus) for the year | (17 232) |
| Total amounts to be called from Members States at 31 December 2010 | 30 931 |
| Split between: |
| Employee Benefits | 37 172 |
| Other amounts | (6 241) |

EUR millions

Amount

Amounts to be called from Member States at 31 December 2009 (restated)

45 601

45 601

Return of 2009 budget surplus to Member States

2 254

Movement in Guarantee Fund reserve

273

Other reserve movements

21

ECSC in liquidation: transfer 2009 result to reserves

14

Economic outturn (surplus) for the year

(17 232)

Total amounts to be called from Members States at 31 December 2010

30 931

Split between:

Split between:

Employee Benefits

37 172

Other amounts

(6 241)

This amount, which is not classified as a receivable from the Member States, is equivalent to the sum of the accumulated deficit resulting from previous years (EUR 48 163 million) and the economic surplus for 2010 (EUR 17 232 million). The purpose of ‘amounts to be called from Member States’ is to reflect the actual situation of an annual budget process which funds multi-annual actions. The reserves (EUR 3 484 million), which have to be used in accordance with their own specific regulations and rules, are deliberately not taken into account for this purpose.

In essence, this amount represents that part of the expenses already incurred by the EU up to 31 December 2010 that must be funded by future budgets. Many expenses are recognised under accrual accounting rules in the year N although they may be actually paid in year N+1 and funded by using the budget of year N+1. The inclusion in the accounts of these liabilities coupled with the fact that the corresponding amounts are financed from future budgets, results in liabilities greatly exceeding assets at the year-end. The most significant amounts to be highlighted are the EAGF activities. The amount of payments due to the Member States for the period 16 October to 31 December 2010 was EUR 33 billion. The majority of the amounts to be called are in fact paid by the Member States in less than 12 months after the end of the financial year in question as part of the budget of the following year.

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

| EUR millions |
| --- |
| | Amount |
| Short-term: amounts to be paid in 2011 | 1 278 |
| Long-term: amounts to be paid after 2011 | 35 894 |
| Total employee benefits liability at 31.12.2010 | 37 172 |

EUR millions

Amount

Short-term: amounts to be paid in 2011

1 278

Long-term: amounts to be paid after 2011

35 894

Total employee benefits liability at 31.12.2010

37 172

There was a EUR 14,7 billion decrease in the amounts to be called from Members States compared to last year. This decrease is due mainly to: (1) a EUR 9,4 billion decrease in accounts payable (see note 2.18), (2) an increase of EUR 2 billion in short-term financial liabilities (note 2.17), (3) an increase of EUR 2,6 billion in long-term pre-financing, and (4) a EUR 4,6 billion increase in short-term receivables (note 2.10).

2.18

2.17

2.10

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

3.   NOTES TO THE ECONOMIC OUTTURN ACCOUNT

3.1.   OWN RESOURCE AND CONTRIBUTIONS REVENUE

OWN RESOURCE AND CONTRIBUTIONS REVENUE

| EUR millions |
| --- |
| | Note | 2010 | 2009 |
| Own resource revenue: | 3.1.1 | | |
| GNI resources | | 91 178 | 81 978 |
| VAT resources | | 12 517 | 12 795 |
| Traditional own resources: |
| Custom duties | | 16 065 | 14 002 |
| Sugar levies | | 150 | 130 |
| Total traditional own resources | | 16 215 | 14 132 |
| Budgetary adjustments | 3.1.2 | 2 135 | 1 399 |
| Contributions of third countries (incl. EFTA countries) | | 283 | 233 |
| Total | | 122 328 | 110 537 |

EUR millions

Note

2010

2009

Own resource revenue:

3.1.1

3.1.1

GNI resources

91 178

81 978

VAT resources

12 517

12 795

Traditional own resources:

Custom duties

16 065

16 065

14 002

14 002

Sugar levies

150

130

Total traditional own resources

16 215

14 132

Budgetary adjustments

3.1.2

3.1.2

2 135

1 399

Contributions of third countries (incl. EFTA countries)

283

233

Total

122 328

110 537

Own resources revenue is the primary element of the European Union’s operating revenue. Thus the bulk of expenditure is financed by own resources as other revenue represents only a minor part of the total financing.

3.1.1.   
  Own resource revenue

Own resource revenue

There are three categories of own resources: traditional own resources, the VAT-based resource and the GNI-based resource. Traditional own resources comprise sugar levies and customs duties. A correction mechanism in respect of budgetary imbalances (UK Rebate) as well as a gross reduction in the annual GNI-based contribution of Netherlands and Sweden are also part of the own resources system. Member States retain, by way of collection costs, 25 % of traditional own resources, and the above amounts are shown net of this deduction.

Compared to 2009, there has been a EUR 9,2 billion increase in the GNI based own resource revenue, which reflects the need to finance higher payments appropriations in 2010. There was a EUR 2 billion increase in custom duties caused primarily by an increase in imports.

3.1.2.   
  Budgetary adjustments

Budgetary adjustments

The budgetary adjustments include the budget surplus from 2009 (EUR 2 254 million) which is indirectly refunded to Member States by deduction of the amounts of own resources they have to transfer to the EU in the following year – thus it is a revenue for 2010. Additionally, according to the ORD 2007, the United Kingdom is granted a correction in respect of budgetary imbalances. As this amount is financed by the other Member States there should be no net effect on the budgetary or economic outturn. However, an amount of EUR 112 million was registered under this heading being the differences in the Euro rates used for budgetary purposes (see Article 10 (3) of Regulation (EC, Euratom) No 1150/2000) and the rates in force at the time when those Member States not part of the EMU actually made their payments.

3.2.   OTHER OPERATING REVENUE

OTHER OPERATING REVENUE

| EUR millions |
| --- |
| | Note | 2010 | 2009 |
| Fines | 3.2.1 | 3 077 | 2 648 |
| Agricultural levies | 3.2.2 | 25 | 705 |
| Recovery of expenses: | 3.2.3 | | |
| Direct centralised management | | 49 | 63 |
| Indirect centralised management | | 11 | 6 |
| Decentralised management | | 71 | 41 |
| Shared management | | 1 776 | 1 066 |
| Total | | 1 907 | 1 176 |
| Revenue from administrative operations: | 3.2.4 | | |
| Staff | | 1 073 | 1 010 |
| Property, plant and equipment related revenue | | 13 | 33 |
| Other administrative revenue | | 121 | 165 |
| Total | | 1 207 | 1 208 |
| Miscellaneous operating revenue: | 3.2.5 | | |
| Adjustments/provisions | | 157 | 150 |
| Exchange gains | | 460 | 618 |
| Other | | 1 355 | 1 027 |
| Total | | 1 972 | 1 795 |
| Total | | 8 188 | 7 532 |

EUR millions

Note

2010

2009

Fines

3.2.1

3.2.1

3 077

2 648

Agricultural levies

3.2.2

3.2.2

25

705

Recovery of expenses:

3.2.3

3.2.3

Direct centralised management

49

63

Indirect centralised management

11

6

Decentralised management

71

41

Shared management

1 776

1 066

Total

1 907

1 176

Revenue from administrative operations:

3.2.4

3.2.4

Staff

1 073

1 010

Property, plant and equipment related revenue

13

33

Other administrative revenue

121

165

Total

1 207

1 208

Miscellaneous operating revenue:

3.2.5

3.2.5

Adjustments/provisions

157

150

Exchange gains

460

618

Other

1 355

1 027

Total

1 972

1 795

Total

8 188

7 532

3.2.1.   
  Fines

Fines

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

3.2.2.   
  Agricultural levies

Agricultural levies

These amounts concern milk levies of EUR 25 million (2009: EUR 99 million plus sugar levies of EUR 606 million). Milk levies are a market management tool aimed at penalising milk producers who exceed their reference quantities. As it is not linked to prior payments by the Commission, it is in practice considered as revenue for a specific purpose. Milk quotas are being phased out, which explains the continued decrease in levies revenue. From the 2008/2009 agricultural year onwards quotas will be increased annually by 1 % until their abolition in 2015.

Sugar levies relate to the sugar restructuring fund, whereby the reform of the sugar sector has lowered the internal price of sugar in order to reduce the gap between the EU price and the international price. To encourage the less competitive sugar producers to leave the market, a self-financing restructuring fund was created, financed by revenue stemming from a temporary tax levied on sugar producers, which is treated as assigned revenue. While the scheme's payments will continue until September 2012 all the revenue related to the sugar restructuring fund has already been declared by Member States at 31 December 2009, thus revenues are zero for 2010.

3.2.3.   
  Recovery of expenses

Recovery of expenses

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

The main amount, EUR 1 775 million, relates to shared management and is made up of EUR 1 331 million concerning the European Agricultural Guarantee Fund (EAGF), EUR 19 million for TRDI, EUR 146 million for SAPARD and EUR 279 million for Structural Actions.

(a)   Agriculture: EAGF

Agriculture: EAGF

In the framework of EAGF, amounts accounted for as revenue of the year under this heading are EUR 1 331 million, made up as follows:

| — | conformity corrections decided during the year, EUR 1 032 million; |
| --- | --- |

—

conformity corrections decided during the year, EUR 1 032 million;

| — | fraud and irregularities EUR 299 million: reimbursements declared by Member States and recovered during the year, EUR 178 million, plus the increase in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities, EUR 121 million (EUR 1 130 million minus the write-down adjustment of EUR 382 million at year-end 2010 compared to EUR 627 million at year-end 2009) – see also note 2.10.2. |
| --- | --- |

—

fraud and irregularities EUR 299 million: reimbursements declared by Member States and recovered during the year, EUR 178 million, plus the increase in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities, EUR 121 million (EUR 1 130 million minus the write-down adjustment of EUR 382 million at year-end 2010 compared to EUR 627 million at year-end 2009) – see also note 2.10.2.

2.10.2

(b)   Structural Actions

Structural Actions

The recovery of expenditure under the Structural actions included under this heading amounted to EUR 279 million (2009: EUR 613 million). The main amounts in this sub-heading are the recovery orders issued by the Commission to recover undue expenditure made in previous years for an amount of EUR 610 million and the decrease of the accrued income at year-end of EUR 377 million.

Recovery orders are issued only in the following cases:

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

—

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

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

—

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

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

—

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

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

3.2.4.   
  Revenue from administrative operations

Revenue from administrative operations

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

3.2.5.   
  Miscellaneous operating revenue

Miscellaneous operating revenue

An amount of EUR 430 million (2009: EUR 376 million) relates to amounts received from accession countries. Exchange gains, except on financial activities dealt with in note 3.5 below, are also included under this heading. These arise from the everyday activities and related transactions made in currencies other than the Euro, as well as the year-end revaluation required to prepare the accounts. They contain both realised and unrealised gains. There was a net exchange gain for the year of EUR 21 million (2009: EUR 185 million).

3.5

3.3.   ADMINISTRATIVE EXPENSES

ADMINISTRATIVE EXPENSES

| EUR millions |
| --- |
| | 2010 | 2009 |
| Staff expenses | 5 171 | 4 898 |
| Depreciation and impairment | 384 | 436 |
| Other administrative expenses | 3 059 | 2 799 |
| Total | 8 614 | 8 133 |

EUR millions

2010

2009

Staff expenses

5 171

4 898

Depreciation and impairment

384

436

Other administrative expenses

3 059

2 799

Total

8 614

8 133

These are administrative expenses incurred as part of the activities of the EU and include staff costs, depreciation and other costs associated with the running of the institutions and agencies (such as rental costs, maintenance costs, supplies, training costs, etc).

3.4.   OPERATING EXPENSES

OPERATING EXPENSES

| EUR millions |
| --- |
| | Note | 2010 | 2009
  Restated |
| Primary operating expenses: | 3.4.1 | | |
| Direct centralised management | | 10 123 | 8 744 |
| Indirect centralised management | | 4 045 | 3 605 |
| Decentralised management | | 933 | 137 |
| Shared management | | 85 432 | 87 251 |
| Joint management | | 1 868 | 1 655 |
| Total | | 102 401 | 101 392 |
| Other operating expenses: | 3.4.2 | | |
| Adjustments/provisions | | 68 | 199 |
| Exchange losses | | 439 | 432 |
| Other | | 856 | 481 |
| Total | | 1 363 | 1 112 |
| Total | | 103 764 | 102 504 |

EUR millions

Note

2010

2009

Restated

Primary operating expenses:

Primary operating expenses:

3.4.1

3.4.1

Direct centralised management

10 123

8 744

Indirect centralised management

4 045

3 605

Decentralised management

933

137

Shared management

85 432

87 251

Joint management

1 868

1 655

Total

102 401

101 392

Other operating expenses:

Other operating expenses:

3.4.2

3.4.2

Adjustments/provisions

68

199

Exchange losses

439

432

Other

856

481

Total

1 363

1 112

Total

103 764

102 504

3.4.1.   
  Primary operating expenses

Primary operating expenses

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

For shared management, the decrease in 2010 is due mainly to the closing of the programmes for the period 2000-2006 (ESF) and to the fact that for FEAGA the execution has diminished in 2010 compared to the previous year. This decrease is partly compensated by the Structural Actions for the programming period 2007-2013, which already reached a normal level in 2009, after a slow start-up. The increase of expenditure under centralised management is due to research and development actions.

As explained in note 2.5.2, in 2010 the Commission changed its accounting policy for certain expenditure under cohesion and rural development. Since the amounts concerned are material, the Commission is required by its accounting rules to restate the relevant 2009 figures so as to present comparable figures showing the situation as it would have looked had the same accounting treatment been followed last year. The impact of this restatement on the original 2009 economic outturn is shown below:

2.5.2

| EUR millions |
| --- |
| | 2009 accounts originally presented | Change in accounting policy | 2009 accounts
  Restated |
| Operating revenue | 118 069 | — | 118 069 |
| Operating expenses: |
| Primary operating expenses: |
| Shared management | (89 681) | 2 430 | (87 251) |
| Total operating expenses | (113 067) | 2 430 | (110 637) |
| Surplus from operating activities | 5 002 | 2 430 | 7 432 |
| Economic Outturn | 4 457 | 2 430 | 6 887 |

EUR millions

2009 accounts originally presented

Change in accounting policy

2009 accounts

Restated

Operating revenue

Operating revenue

118 069

—

118 069

Operating expenses:

Operating expenses:

Primary operating expenses:

Shared management

(89 681)

2 430

(87 251)

Total operating expenses

(113 067)

2 430

(110 637)

Surplus from operating activities

Surplus from operating activities

5 002

2 430

7 432

Economic Outturn

Economic Outturn

4 457

2 430

6 887

3.4.2.   
  Other operating expenses

Other operating expenses

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

3.6

Under the ‘other’ sub-heading there was a significant increase in amounts written down on Commission debtors – EUR 365 million compared to EUR 26 million in 2009. This is due mainly to specific reductions made relating to fines decisions (EUR 273 million) and EAGF & Rural development write downs totalling EUR 82 million.

Research and Development costs:

Research and Development costs:

Included as expenses in 2010 were the following costs:

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

EUR millions

2010

Research costs

295

Non-capitalised development costs

157

Recognised as an expense

Recognised as an expense

452

452

3.5.   FINANCIAL REVENUE

FINANCIAL REVENUE

| EUR millions |
| --- |
| | 2010 | 2009 |
| Dividend income | 1 | 14 |
| Interest income: |
| On pre-financing | 42 | 59 |
| On late payments | 382 | 132 |
| On swaps | 0 | 2 |
| On available for sale assets | 100 | 100 |
| On loans | 394 | 265 |
| On cash & cash equivalents | 110 | 158 |
| Other | 2 | 3 |
| Total | 1 030 | 719 |
| Other financial income: |
| Realised gain on sale of financial assets | 11 | 10 |
| Other | 83 | 76 |
| Total | 94 | 86 |
| Present value adjustments | 1 | 10 |
| Exchange gains | 52 | 6 |
| Total | 1 178 | 835 |

EUR millions

2010

2009

Dividend income

Dividend income

1

1

14

14

Interest income:

Interest income:

On pre-financing

42

59

On late payments

382

132

On swaps

0

2

On available for sale assets

100

100

On loans

394

265

On cash & cash equivalents

110

158

Other

2

3

Total

1 030

719

Other financial income:

Other financial income:

Realised gain on sale of financial assets

11

10

Other

83

76

Total

94

86

Present value adjustments

Present value adjustments

1

1

10

10

Exchange gains

Exchange gains

52

52

6

6

Total

1 178

835

3.6.   FINANCIAL EXPENSES

FINANCIAL EXPENSES

| EUR millions |
| --- |
| | 2010 | 2009 |
| Interest expenses: |
| Leasing | 93 | 95 |
| On swaps | 0 | 2 |
| On borrowings | 380 | 248 |
| Other | 23 | 20 |
| Total | 496 | 365 |
| Other financial expenses: |
| Adjustments to financial provisions | 60 | 39 |
| Financial charges on budgetary instruments | 55 | 73 |
| Impairment losses on AFS financial assets | 5 | 15 |
| Realised loss on sale of financial assets | 1 | 0 |
| Other | 42 | 57 |
| Total | 163 | 184 |
| Exchange losses | 2 | 45 |
| Total | 661 | 594 |

EUR millions

2010

2009

Interest expenses:

Interest expenses:

Leasing

93

95

On swaps

0

2

On borrowings

380

248

Other

23

20

Total

496

365

Other financial expenses:

Other financial expenses:

Adjustments to financial provisions

60

39

Financial charges on budgetary instruments

55

73

Impairment losses on AFS financial assets

5

15

Realised loss on sale of financial assets

1

0

Other

42

57

Total

163

184

Exchange losses

Exchange losses

2

2

45

45

Total

661

594

3.7.   SHARE OF NET DEFICIT OF JOINT VENTURES & ASSOCIATES

SHARE OF NET DEFICIT OF JOINT VENTURES & ASSOCIATES

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

2.3.1 & 2.3.2

3.8.   REVENUE FROM NON-EXCHANGE TRANSACTIONS

REVENUE FROM NON-EXCHANGE TRANSACTIONS

In 2010 EUR 129 597 million revenue from non-exchange transactions have been recognised in the economic outturn account.

3.9.   SEGMENT REPORTING

SEGMENT REPORTING

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

‘Activities within the European Union’ is the largest of these headings as it covers the many policy areas within the European Union. ‘Activities outside the European Union’ concerns the policies operated outside the EU, such as trade and aid. “Services & other” are the internal and horizontal activities necessary for the functioning of the EU Institutions and bodies.

Note that own resources and contributions are not split amongst the various activities as these are calculated, collected and managed by central Commission services. They are shown here so as to allow for comparison with the net result in the economic outturn account.

SEGMENT REPORTING – SUMMARY

SEGMENT REPORTING – SUMMARY

| EUR millions |
| --- |
| | Activities within the EU | Activities outside the EU | Services & Other | ECSC in Liquidation | Other Institutions | Consolidation eliminations | TOTAL |
| Other operating revenue: |
| Fines | 3 077 | 0 | 0 | 0 | 0 | 0 | 3 077 |
| Agricultural levies | 25 | 0 | 0 | 0 | 0 | 0 | 25 |
| Recovery of expenses | 1 849 | 89 | 1 | 0 | 0 | (32) | 1 907 |
| Revenue from admin operations | 60 | 36 | 912 | 0 | 347 | (148) | 1 207 |
| Other operating revenue | 2 445 | 10 | 575 | 3 | 1 | (1 062) | 1 972 |
| OTHER OPERATING REVENUE | 7 456 | 135 | 1 488 | 3 | 348 | (1 242) | 8 188 |
| Administrative expenses: |
| Staff expenses | (1 945) | (824) | (1 073) | 0 | (1 353) | 24 | (5 171) |
| Intangible assets and PPE related expenses | (88) | (13) | (119) | 0 | (164) | 0 | (384) |
| Other administrative expenses | (904) | (318) | (902) | 0 | (1 234) | 299 | (3 059) |
| | (2 937) | (1 155) | (2 094) | 0 | (2 751) | 323 | (8 614) |
| Operating expenses: |
| Direct centralised management | (7 115) | (3 597) | (180) | 0 | 0 | 769 | (10 123) |
| Indirect centralised management | (3 821) | (213) | (45) | 0 | 0 | 34 | (4 045) |
| Decentralised management | (113) | (820) | 0 | 0 | 0 | 0 | (933) |
| Shared management | (85 173) | (29) | (230) | 0 | 0 | 0 | (85 432) |
| Joint management | (382) | (1 486) | 0 | 0 | 0 | 0 | (1 868) |
| Other operating expenses | (947) | (23) | (448) | (59) | (2) | 116 | (1 363) |
| | (97 551) | (6 168) | (903) | (59) | (2) | 919 | (103 764) |
| TOTAL OPERATING EXPENSES | (100 488) | (7 323) | (2 997) | (59) | (2 753) | 1 242 | (112 378) |
| Net operating expenses | (93 032) | (7 188) | (1 509) | (56) | (2 405) | 0 | (104 190) |
| Own resource and contributions revenue | | 122 328 |
| Surplus from operating activities | | 18 138 |
| Net financial income | | 517 |
| Movement in employee benefits liability | | (1 003) |
| Share of associates/joint venture results | | (420) |
| Economic outturn for the year | | 17 232 |

EUR millions

Activities within the EU

Activities outside the EU

Services & Other

ECSC in Liquidation

Other Institutions

Consolidation eliminations

TOTAL

Other operating revenue:

Fines

3 077

0

0

0

0

0

3 077

Agricultural levies

25

0

0

0

0

0

25

Recovery of expenses

1 849

89

1

0

0

(32)

1 907

Revenue from admin operations

60

36

912

0

347

(148)

1 207

Other operating revenue

2 445

10

575

3

1

(1 062)

1 972

OTHER OPERATING REVENUE

7 456

7 456

135

135

1 488

1 488

3

3

348

348

(1 242)

(1 242)

8 188

8 188

Administrative expenses:

Administrative expenses:

Staff expenses

(1 945)

(824)

(1 073)

0

(1 353)

24

(5 171)

Intangible assets and PPE related expenses

(88)

(13)

(119)

0

(164)

0

(384)

Other administrative expenses

(904)

(318)

(902)

0

(1 234)

299

(3 059)

(2 937)

(2 937)

(1 155)

(1 155)

(2 094)

(2 094)

0

0

(2 751)

(2 751)

323

323

(8 614)

(8 614)

Operating expenses:

Operating expenses:

Direct centralised management

(7 115)

(3 597)

(180)

0

0

769

(10 123)

Indirect centralised management

(3 821)

(213)

(45)

0

0

34

(4 045)

Decentralised management

(113)

(820)

0

0

0

0

(933)

Shared management

(85 173)

(29)

(230)

0

0

0

(85 432)

Joint management

(382)

(1 486)

0

0

0

0

(1 868)

Other operating expenses

(947)

(23)

(448)

(59)

(2)

116

(1 363)

(97 551)

(97 551)

(6 168)

(6 168)

(903)

(903)

(59)

(59)

(2)

(2)

919

919

(103 764)

(103 764)

TOTAL OPERATING EXPENSES

(100 488)

(7 323)

(2 997)

(59)

(2 753)

1 242

(112 378)

Net operating expenses

Net operating expenses

(93 032)

(93 032)

(7 188)

(7 188)

(1 509)

(1 509)

(56)

(56)

(2 405)

(2 405)

0

0

(104 190)

(104 190)

Own resource and contributions revenue

122 328

122 328

Surplus from operating activities

Surplus from operating activities

18 138

18 138

Net financial income

517

Movement in employee benefits liability

(1 003)

Share of associates/joint venture results

(420)

Economic outturn for the year

Economic outturn for the year

17 232

17 232

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

| EUR millions |
| --- |
| | Economic & Financial affairs | Enterprise & Industry | Competition | Employment | Agriculture | Transport & Energy | Environment | Research | Information Society |
| Other operating revenue: |
| Fines | 0 | 12 | 3 065 | 0 | 0 | 0 | 0 | 0 | 0 |
| Agricultural levies | 0 | 0 | 0 | 0 | 25 | 0 | 0 | 0 | 0 |
| Recovery of expenses | 0 | 1 | 0 | 15 | 1 603 | 12 | 1 | 32 | 14 |
| Revenue from administrative operations | 0 | 0 | 0 | 0 | 0 | 1 | 1 | 1 | 1 |
| Other operating revenue | 4 | 402 | 0 | 39 | 135 | 184 | 39 | 624 | 7 |
| OTHER OPERATING REVENUE | 4 | 415 | 3 065 | 54 | 1 763 | 197 | 41 | 657 | 22 |
| Administrative expenses: | (57) | (178) | (82) | (108) | (115) | (268) | (110) | (391) | (125) |
| Staff expenses | (51) | (128) | (75) | (82) | (95) | (190) | (80) | (218) | (102) |
| Intangible assets and PPE related expenses | 0 | (8) | 0 | (0) | 0 | (11) | (1) | (2) | 0 |
| Other administrative expenses | (6) | (42) | (7) | (26) | (20) | (67) | (29) | (171) | (23) |
| Operating expenses: | (105) | (650) | (305) | (6 077) | (56 176) | (3 328) | (224) | (3 238) | (1 107) |
| Centralised direct management | (105) | (347) | 1 | (176) | (31) | (1 312) | (207) | (2 436) | (1 179) |
| Centralised indirect management | 0 | (90) | 0 | (7) | 0 | (1 750) | 0 | (714) | 78 |
| Decentralised management | 0 | 0 | 0 | (24) | 0 | (5) | 0 | 0 | 0 |
| Shared management | 0 | 0 | 0 | (5 850) | (56 037) | 0 | 0 | 0 | 0 |
| Joint management | 0 | (166) | 0 | (3) | 0 | (197) | 0 | 0 | 0 |
| Other operating expenses | 0 | (47) | (306) | (17) | (108) | (64) | (17) | (88) | (6) |
| TOTAL OPERATING EXPENSES | (162) | (829) | (387) | (6 185) | (56 291) | (3 596) | (333) | (3 630) | (1 231) |
| Net operating expenses | (158) | (414) | 2 678 | (6 131) | (54 528) | (3 399) | (292) | (2 973) | (1 209) |
| | Joint Research Centre | Fisheries | Internal Market | Regional Policy | Taxation & Customs | Education & Culture | Health & Consumer protection | Justice, Freedom & Security | Total Activities within the EU |
| Other operating revenue: |
| Fines | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 077 |
| Agricultural levies | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 25 |
| Recovery of expenses | 0 | 9 | 0 | 150 | 0 | 9 | 1 | 2 | 1 849 |
| Revenue from administrative operations | 38 | 0 | 0 | 0 | 0 | 0 | 9 | 9 | 60 |
| Other operating revenue | 77 | 7 | 174 | 1 | 0 | 166 | 337 | 249 | 2 445 |
| OTHER OPERATING REVENUE | 115 | 16 | 174 | 151 | 0 | 175 | 347 | 260 | 7 456 |
| Administrative expenses: | (341) | (44) | (162) | (71) | (94) | (195) | (323) | (273) | (2 937) |
| Staff expenses | (242) | (35) | (113) | (59) | (38) | (100) | (197) | (140) | (1 945) |
| Intangible assets and PPE related expenses | (27) | 0 | (4) | 0 | (2) | (1) | (24) | (8) | (88) |
| Other administrative expenses | (72) | (9) | (45) | (12) | (54) | (94) | (102) | (125) | (904) |
| Operating expenses: | (85) | (523) | (51) | (22 677) | (16) | (1 445) | (615) | (929) | (97 551) |
| Centralised direct management | (63) | (254) | (10) | (46) | (16) | (175) | (411) | (348) | (7 115) |
| Centralised indirect management | 0 | 0 | 0 | (8) | 0 | (1 254) | (76) | 0 | (3 821) |
| Decentralised management | 0 | 0 | 0 | (84) | 0 | 0 | 0 | 0 | (113) |
| Shared management | 0 | (267) | 0 | (22 524) | 0 | 0 | 0 | (495) | (85 173) |
| Joint management | 0 | 0 | 0 | (15) | 0 | (1) | 0 | 0 | (382) |
| Other operating expenses | (22) | (2) | (41) | 0 | 0 | (15) | (128) | (86) | (947) |
| TOTAL OPERATING EXPENSES | (426) | (567) | (213) | (22 748) | (110) | (1 640) | (938) | (1 202) | (100 488) |
| Net operating expenses | (311) | (551) | (39) | (22 597) | (110) | (1 465) | (591) | (942) | (93 032) |

EUR millions

Economic & Financial affairs

Enterprise & Industry

Competition

Employment

Agriculture

Transport & Energy

Environment

Research

Information Society

Other operating revenue:

Fines

0

12

3 065

0

0

0

0

0

0

Agricultural levies

0

0

0

0

25

0

0

0

0

Recovery of expenses

0

1

0

15

1 603

12

1

32

14

Revenue from administrative operations

0

0

0

0

0

1

1

1

1

Other operating revenue

4

402

0

39

135

184

39

624

7

OTHER OPERATING REVENUE

4

4

415

415

3 065

3 065

54

54

1 763

1 763

197

197

41

41

657

657

22

22

Administrative expenses:

Administrative expenses:

(57)

(57)

(178)

(178)

(82)

(82)

(108)

(108)

(115)

(115

(268)

(268)

(110)

(110)

(391)

(391)

(125)

(125)

Staff expenses

(51)

(128)

(75)

(82)

(95)

(190)

(80)

(218)

(102)

Intangible assets and PPE related expenses

0

(8)

0

(0)

0

(11)

(1)

(2)

0

Other administrative expenses

(6)

(42)

(7)

(26)

(20)

(67)

(29)

(171)

(23)

Operating expenses:

Operating expenses:

(105)

(105)

(650)

(650)

(305)

(305)

(6 077)

(6 077)

(56 176)

(56 176)

(3 328)

(3 328)

(224)

(224)

(3 238)

(3 238)

(1 107)

(1 107)

Centralised direct management

(105)

(347)

1

(176)

(31)

(1 312)

(207)

(2 436)

(1 179)

Centralised indirect management

0

(90)

0

(7)

0

(1 750)

0

(714)

78

Decentralised management

0

0

0

(24)

0

(5)

0

0

0

Shared management

0

0

0

(5 850)

(56 037)

0

0

0

0

Joint management

0

(166)

0

(3)

0

(197)

0

0

0

Other operating expenses

0

(47)

(306)

(17)

(108)

(64)

(17)

(88)

(6)

TOTAL OPERATING EXPENSES

(162)

(829)

(387)

(6 185)

(56 291)

(3 596)

(333)

(3 630)

(1 231)

Net operating expenses

Net operating expenses

(158)

(158)

(414)

(414)

2 678

2 678

(6 131)

(6 131)

(54 528)

(54 528)

(3 399)

(3 399)

(292)

(292)

(2 973)

(2 973)

(1 209)

(1 209)

Joint Research Centre

Fisheries

Internal Market

Regional Policy

Taxation & Customs

Education & Culture

Health & Consumer protection

Justice, Freedom & Security

Total Activities within the EU

Other operating revenue:

Fines

0

0

0

0

0

0

0

0

3 077

Agricultural levies

0

0

0

0

0

0

0

0

25

Recovery of expenses

0

9

0

150

0

9

1

2

1 849

Revenue from administrative operations

38

0

0

0

0

0

9

9

60

Other operating revenue

77

7

174

1

0

166

337

249

2 445

OTHER OPERATING REVENUE

115

115

16

16

174

174

151

151

0

0

175

175

347

347

260

260

7 456

7 456

Administrative expenses:

Administrative expenses:

(341)

(341)

(44)

(44)

(162)

(162)

(71)

(71)

(94)

(94)

(195)

(195)

(323)

(323)

(273)

(273)

(2 937)

(2 937)

Staff expenses

(242)

(35)

(113)

(59)

(38)

(100)

(197)

(140)

(1 945)

Intangible assets and PPE related expenses

(27)

0

(4)

0

(2)

(1)

(24)

(8)

(88)

Other administrative expenses

(72)

(9)

(45)

(12)

(54)

(94)

(102)

(125)

(904)

Operating expenses:

Operating expenses:

(85)

(85)

(523)

(523)

(51)

(51)

(22 677)

(22 677)

(16)

(16)

(1 445)

(1 445)

(615)

(615)

(929)

(929)

(97 551)

(97 551)

Centralised direct management

(63)

(254)

(10)

(46)

(16)

(175)

(411)

(348)

(7 115)

Centralised indirect management

0

0

0

(8)

0

(1 254)

(76)

0

(3 821)

Decentralised management

0

0

0

(84)

0

0

0

0

(113)

Shared management

0

(267)

0

(22 524)

0

0

0

(495)

(85 173)

Joint management

0

0

0

(15)

0

(1)

0

0

(382)

Other operating expenses

(22)

(2)

(41)

0

0

(15)

(128)

(86)

(947)

TOTAL OPERATING EXPENSES

(426)

(567)

(213)

(22 748)

(110)

(1 640)

(938)

(1 202)

(100 488)

Net operating expenses

Net operating expenses

(311)

(311)

(551)

(551)

(39)

(39)

(22 597)

(22 597)

(110)

(110)

(1 465)

(1 465)

(591)

(591)

(942)

(942)

(93 032)

(93 032)

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

| EUR millions |
| --- |
| | External Relations | Trade | Development | Enlargement | Humanitarian Aid | Total Activities outside the EU |
| Other operating revenue: |
| Recovery of expenses | 15 | 0 | 10 | 61 | 3 | 89 |
| Revenue from administrative operations | 36 | 0 | 0 | 0 | 0 | 36 |
| Other operating revenue | 5 | 0 | 1 | 5 | (1) | 10 |
| OTHER OPERATING REVENUE | 56 | 0 | 11 | 66 | 2 | 135 |
| Administrative expenses: | (862) | (57) | (165) | (44) | (27) | (1 155) |
| Staff expenses | (577) | (49) | (144) | (37) | (17) | (824) |
| Intangible assets and PPE related expenses | (13) | 0 | 0 | 0 | 0 | (13) |
| Other administrative expenses | (272) | (8) | (21) | (7) | (10) | (318) |
| Operating expenses: | (2 766) | (7) | (1 387) | (1 063) | (945) | (6 168) |
| Direct centralised management | (1 722) | (5) | (866) | (531) | (473) | (3 597) |
| Indirect centralised management | (171) | 0 | (16) | (26) | 0 | (213) |
| Decentralised management | (259) | 0 | (95) | (466) | 0 | (820) |
| Shared management | (29) | 0 | 0 | 0 | 0 | (29) |
| Joint management | (574) | (2) | (405) | (38) | (467) | (1 486) |
| Other operating expenses | (11) | 0 | (5) | (2) | (5) | (23) |
| TOTAL OPERATING EXPENSES | (3 628) | (64) | (1 552) | (1 107) | (972) | (7 323) |
| Net operating expenses | (3 572) | (64) | (1 541) | (1 041) | (970) | (7 188) |

EUR millions

External Relations

Trade

Development

Enlargement

Humanitarian Aid

Total Activities outside the EU

Other operating revenue:

Recovery of expenses

15

0

10

61

3

89

Revenue from administrative operations

36

0

0

0

0

36

Other operating revenue

5

0

1

5

(1)

10

OTHER OPERATING REVENUE

56

56

0

0

11

11

66

66

2

2

135

135

Administrative expenses:

Administrative expenses:

(862)

(862)

(57)

(57)

(165)

(165)

(44)

(44)

(27)

(27)

(1 155)

(1 155)

Staff expenses

(577)

(49)

(144)

(37)

(17)

(824)

Intangible assets and PPE related expenses

(13)

0

0

0

0

(13)

Other administrative expenses

(272)

(8)

(21)

(7)

(10)

(318)

Operating expenses:

Operating expenses:

(2 766)

(2 766)

(7)

(7)

(1 387)

(1 387)

(1 063)

(1 063)

(945)

(945)

(6 168)

(6 168)

Direct centralised management

(1 722)

(5)

(866)

(531)

(473)

(3 597)

Indirect centralised management

(171)

0

(16)

(26)

0

(213)

Decentralised management

(259)

0

(95)

(466)

0

(820)

Shared management

(29)

0

0

0

0

(29)

Joint management

(574)

(2)

(405)

(38)

(467)

(1 486)

Other operating expenses

(11)

0

(5)

(2)

(5)

(23)

TOTAL OPERATING EXPENSES

(3 628)

(64)

(1 552)

(1 107)

(972)

(7 323)

Net operating expenses

Net operating expenses

(3 572)

(3 572)

(64)

(64)

(1 541)

(1 541)

(1 041)

(1 041)

(970)

(970)

(7 188)

(7 188)

SEGMENT REPORTING – SERVICES & OTHER

SEGMENT REPORTING – SERVICES & OTHER

| EUR millions |
| --- |
| | Press & Communication | Anti-Fraud Office | Co-ordination | Personnel & Administration | Eurostat | Budget | Audit | Languages | Other | Total Services & Other |
| Other operating revenue: |
| Recovery of expenses | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 |
| Revenue from administrative operations | 2 | 5 | 0 | 764 | 0 | 51 | 0 | 90 | 0 | 912 |
| Other operating revenue | (2) | (1) | 8 | 25 | 0 | 37 | 0 | 53 | 455 | 575 |
| OTHER OPERATING REVENUE | 1 | 4 | 8 | 789 | 0 | 88 | 0 | 143 | 455 | 1 488 |
| Administrative expenses: | (108) | (54) | (168) | (1 260) | (85) | (52) | (10) | (403) | 46 | (2 094) |
| Staff expenses | (67) | (38) | (140) | (448) | (62) | (39) | (9) | (316) | 46 | (1.073) |
| Intangible assets and PPE related expenses | (2) | (1) | 0 | (114) | 0 | 0 | 0 | (2) | 0 | (119) |
| Other administrative expenses | (39) | (15) | (28) | (698) | (23) | (13) | (1) | (85) | 0 | (902) |
| Operating expenses: | (136) | (17) | (2) | (32) | (37) | (234) | 0 | (15) | (430) | (903) |
| Direct centralised management | (91) | (17) | (1) | (30) | (37) | (4) | 0 | 0 | 0 | (180) |
| Indirect centralised management | (45) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (45) |
| Shared management | 0 | 0 | 0 | 0 | 0 | (230) | 0 | 0 | 0 | (230) |
| Other operating expenses | 0 | 0 | (1) | (2) | 0 | 0 | 0 | (15) | (430) | (448) |
| TOTAL OPERATING EXPENSES | (244) | (71) | (170) | (1 292) | (122) | (286) | (10) | (418) | (384) | (2 997) |
| Net operating expenses | (243) | (67) | (162) | (503) | (122) | (198) | (10) | (275) | 71 | (1 509) |

EUR millions

Press & Communication

Anti-Fraud Office

Co-ordination

Personnel & Administration

Eurostat

Budget

Audit

Languages

Other

Total Services & Other

Other operating revenue:

Recovery of expenses

1

0

0

0

0

0

0

0

0

1

Revenue from administrative operations

2

5

0

764

0

51

0

90

0

912

Other operating revenue

(2)

(1)

8

25

0

37

0

53

455

575

OTHER OPERATING REVENUE

1

1

4

4

8

8

789

789

0

0

88

88

0

0

143

143

455

455

1 488

1 488

Administrative expenses:

Administrative expenses:

(108)

(108)

(54)

(54)

(168)

(168)

(1 260)

(1 260)

(85)

(85)

(52)

(52)

(10)

(10)

(403)

(403)

46

46

(2 094)

(2 094)

Staff expenses

(67)

(38)

(140)

(448)

(62)

(39)

(9)

(316)

46

(1.073)

Intangible assets and PPE related expenses

(2)

(1)

0

(114)

0

0

0

(2)

0

(119)

Other administrative expenses

(39)

(15)

(28)

(698)

(23)

(13)

(1)

(85)

0

(902)

Operating expenses:

Operating expenses:

(136)

(136)

(17)

(17)

(2)

(2)

(32)

(32)

(37)

(37)

(234)

(234)

0

0

(15)

(15)

(430)

(430)

(903)

(903)

Direct centralised management

(91)

(17)

(1)

(30)

(37)

(4)

0

0

0

(180)

Indirect centralised management

(45)

0

0

0

0

0

0

0

0

(45)

Shared management

0

0

0

0

0

(230)

0

0

0

(230)

Other operating expenses

0

0

(1)

(2)

0

0

0

(15)

(430)

(448)

TOTAL OPERATING EXPENSES

(244)

(71)

(170)

(1 292)

(122)

(286)

(10)

(418)

(384)

(2 997)

Net operating expenses

Net operating expenses

(243)

(243)

(67)

(67)

(162)

(162)

(503)

(503)

(122)

(122)

(198)

(198)

(10)

(10)

(275)

(275)

71

71

(1 509)

(1 509)

4.   NOTES TO THE CASHFLOW TABLE

4.1.   PURPOSE AND PREPARATION OF THE CASHFLOW TABLE

PURPOSE AND PREPARATION OF THE CASHFLOW TABLE

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

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

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

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

4.2.   OPERATING ACTIVITIES

OPERATING ACTIVITIES

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

4.3.   INVESTING ACTIVITIES

INVESTING ACTIVITIES

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

It should be noted that EUR 9 080 million of cash and cash equivalent balances held by the Commission are not available for use by the EU. This is the cash received as payment of fines levied, where the other party is appealing the imposition of the fine. These amounts are clearly disclosed as “restricted cash” under note 2.11 above.

2.11

5.   CONTINGENT ASSETS & LIABILITIES AND OTHER DISCLOSURES

CONTINGENT ASSETS

CONTINGENT ASSETS

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Guarantees received: |
| Performance guarantees | 301 | 252 |
| Other guarantees | 30 | 27 |
| Other contingent assets | 8 | 18 |
| Total Contingent Assets | 339 | 297 |

EUR millions

31.12.2010

31.12.2009

Guarantees received:

Performance guarantees

301

252

Other guarantees

30

27

Other contingent assets

8

18

Total Contingent Assets

339

297

Performance guarantees are sometimes requested to ensure that beneficiaries of EU funding meet the obligations of their contracts with the EU. Other contingent assets relate primarily to possible reimbursement of taxes related to Commission buildings.

CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

| EUR millions |
| --- |
| | Note | 31.12.2010 | 31.12.2009 |
| Guarantees given | 5.1 | 22 171 | 19 330 |
| Fines – appeals to the Court of Justice | 5.2 | 9 627 | 11 969 |
| EAGF – court judgements pending | 5.3 | 1 772 | 1 945 |
| Amounts relating to legal cases and other disputes | 5.4 | 458 | 416 |
| Other contingent liabilities | 5.5 | 4 | 12 |
| Total Contingent Liabilities | | 34 032 | 33 672 |
| All contingent liabilities would be financed, should they fall due, by the EU budget in the years to come. |

EUR millions

Note

31.12.2010

31.12.2009

Guarantees given

5.1

22 171

19 330

Fines – appeals to the Court of Justice

5.2

9 627

11 969

EAGF – court judgements pending

5.3

1 772

1 945

Amounts relating to legal cases and other disputes

5.4

458

416

Other contingent liabilities

5.5

4

12

Total Contingent Liabilities

34 032

33 672

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

5.1.   GUARANTEES GIVEN

GUARANTEES GIVEN

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

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

| EUR millions |
| --- |
| | Risk Sharing
  31.12.2010 | Non-risk Sharing
  31.12.2010 | Outstanding
  31.12.2010
  Total | Outstanding
  31.12.2009 |
| Public authority | Private company |
| 65 % guarantee | 3 625 | 12 443 | 2 149 | 18 217 | 14 945 |
| 70 % guarantee | 87 | 2 132 | 62 | 2 281 | 2 596 |
| 75 % guarantee | 0 | 635 | 60 | 695 | 850 |
| 100 % guarantee | 0 | 683 | 106 | 789 | 821 |
| Total | 3 712 | 15 893 | 2 377 | 21 982 | 19 212 |

EUR millions

Risk Sharing

31.12.2010

Non-risk Sharing

31.12.2010

Outstanding

31.12.2010

Total

Outstanding

31.12.2009

Public authority

Private company

65 % guarantee

3 625

12 443

2 149

18 217

18 217

14 945

70 % guarantee

87

2 132

62

2 281

2 281

2 596

75 % guarantee

0

635

60

695

695

850

100 % guarantee

0

683

106

789

789

821

Total

3 712

15 893

2 377

21 982

19 212

The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries at 31 December 2010 (including loans granted to Member States before accession). However, the EU’s guarantee is limited to a percentage of the ceiling of the credit lines authorised: 65 %, 70 %, 75 % or 100 %. Where the ceiling is not reached, the EU guarantee covers the full amount. At 31 December 2010 the amount outstanding totalled EUR 21 982 million and this, therefore, is the maximum exposure faced by the EU.

For loans covered by the EU budget guarantee, the EIB also obtains guarantees from third parties (States, public or private financial institutions); in these cases the Commission is a secondary guarantor. The EU budget guarantee covers only the political risk of guarantees provided under the title of "risk-sharing". The other risks are covered by the EIB should the primary guarantor not honour the undertakings given. For guarantees provided under the title of "non-risk sharing", all the risks are covered by the EU budget should the primary guarantor not honour its undertakings given. If the primary guarantor is a public authority these risks are confined as a rule to the political risk, but when the guarantees are provided by an institution or a private company, the EU budget might also have to cover the commercial risk.

5.1.2.   
  Other guarantees given

Other guarantees given

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Risk Sharing Finance Facility (RSFF) | 161 | 94 |
| Loan Guarantee Instrument for Ten-T Projects (LGTT) | 11 | 6 |
| MEDA: Moroccan guarantees | 17 | 17 |
| Other | 0 | 1 |
| Total | 189 | 118 |

EUR millions

31.12.2010

31.12.2009

Risk Sharing Finance Facility (RSFF)

161

94

Loan Guarantee Instrument for Ten-T Projects (LGTT)

11

6

MEDA: Moroccan guarantees

17

17

Other

0

1

Total

189

118

Risk Sharing Finance Facility (RSFF)

Risk Sharing Finance Facility (RSFF)

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

At 31 December 2010 the Commission had contributed EUR 515 million to the RSFF. This has been invested by the EIB in bonds (EUR 419 million at 31 December 2010), term deposits (EUR 55 million) and cash equivalents (EUR 33 million). At end 2010, EUR 2 212 million of loans have been signed and are thus covered by the Facility. A default of EUR 5 million occurred during 2009 and thus was charged to the Facility. The amount included as a contingent liability above, EUR 161 million, represents the estimated maximum loss at 31 December 2010 that the Commission would suffer in case of defaults on loans or guarantees given by the EIB within the framework of the RSFF. This represents 7,3 % of the total amounts guaranteed. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Facility.

Loan Guarantee Instrument for Ten-T Projects (LGTT)

Loan Guarantee Instrument for Ten-T Projects (LGTT)

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

At 31 December 2010 the Commission had contributed EUR 155 million to the LGTT. This has been invested by the EIB in bonds (EUR 111 million at 31 December 2010), term deposits (EUR 36 million) and cash (EUR 5 million). At end 2010, EUR 140 million of loans have been signed and are thus covered by the guarantee. The amount included as a contingent liability, EUR 11 million, represents the estimated maximum loss at 31 December 2010 that the Commission would suffer in case of defaults on loans given by the EIB within the framework of the LGTT operations. This represents 7,9 % of the total amounts guaranteed. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Instrument.

The assets of the RSFF and LGTT instruments are included on the Commission's balance sheet as short-term Available-for-sale assets (see note 2.8) and cash (note 2.11).

2.8

2.11

Meda

Meda

As part of the MEDA programme, the Commission created a guarantee mechanism through a specific fund, which will benefit two Moroccan organisations, namely the Caisse Centrale de Garantie and the Fonds Dar Ad-Damane. As at 31 December 2010, the fund amounts to EUR 27 million that are shown as cash and cash equivalents – see note 2.11. The Commission guarantee shown as contingent liability covers EUR 17 million of the loans given by the organisations mentioned above.

2.11

5.2.   FINES

FINES

These amounts concern fines imposed by the Commission for infringement of competition rules that have been provisionally paid and where either an appeal has been lodged or where it is unknown if an appeal will be made. The contingent liability will be maintained until a decision by the Court of Justice on the case is final. Interest earned on provisional payments (EUR 561 million) is included in the economic result for the year and also as a contingent liability to reflect the uncertainty of the Commission’s title to these amounts.

5.3.   EAGF – COURT JUDGEMENTS PENDING

EAGF – COURT JUDGEMENTS PENDING

These are contingent liabilities towards the Member States connected with the EAGF conformity decisions, pending judgement of the Court of Justice. The determination of the final amount of the liability and the year in which the effect of successful appeals will be charged to the budget will depend on the length of the procedure before the Court. An estimate of the probable amounts to be paid has been included as a long-term provision on the balance sheet – see note 2.13.

2.13

5.4.   AMOUNTS RELATED TO LEGAL CASES AND OTHER DISPUTES

AMOUNTS RELATED TO LEGAL CASES AND OTHER DISPUTES

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

5.5.   OTHER CONTINGENT LIABILITIES

OTHER CONTINGENT LIABILITIES

This heading includes other smaller contingent liability amounts not classifiable under the above headings.

Other significant disclosures

Other significant disclosures

5.6.   COMMITMENTS AGAINST APPROPRIATIONS NOT YET CONSUMED

COMMITMENTS AGAINST APPROPRIATIONS NOT YET CONSUMED

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Commitments against appropriations not yet consumed | 155 642 | 134 689 |

EUR millions

31.12.2010

31.12.2009

Commitments against appropriations not yet consumed

155 642

134 689

The budgetary RAL (‘Reste à Liquider’) is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes. At 31 December 2010 the budgetary RAL totalled EUR 194 395 million. The amount disclosed above is this budgetary RAL less related amounts that have been included as expenses in the 2010 economic outturn account.

5.7.   SIGNIFICANT LEGAL COMMITMENTS

SIGNIFICANT LEGAL COMMITMENTS

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| Structural Operations | 210 638 | 275 761 |
| Protocol with Mediterranean countries | 263 | 263 |
| Fisheries agreements | 130 | 249 |
| Galileo programme | 513 | 1 517 |
| GMES programme | 390 | 556 |
| TEN-T | 3 530 | 4 289 |
| Other contractual commitments | 3 920 | 1 325 |
| Total | 219 384 | 283 960 |

EUR millions

31.12.2010

31.12.2009

Structural Operations

210 638

275 761

Protocol with Mediterranean countries

263

263

Fisheries agreements

130

249

Galileo programme

513

1 517

GMES programme

390

556

TEN-T

3 530

4 289

Other contractual commitments

3 920

1 325

Total

219 384

283 960

These commitments originated because the Commission decided to enter into long-term legal commitments in respect of amounts that were not yet covered by commitment appropriations in the budget. This can relate to multi-annual programmes such as Structural Actions or amounts that the European Union is committed to pay in the future under administrative contracts existing at the balance sheet date (e.g. relating to the provision of services such as security, cleaning, etc, but also contractual commitments concerning specific projects such as building works). Not all multi-annual programmes contain commitments requiring inclusion under this heading since expenditure in future years is conditional on the annual decisions by the budgetary authority or changes in the rules concerned.

5.7.1.   
  Structural Actions

Structural Actions

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

| EUR millions |
| --- |
| | Financial perspective amounts 2007-2013
  (A) | Legal commitments concluded
  (B) | Budget commitments 2007-2010
  (C) | Legal commitments less budget commitments
  (= B – C) | Maximum commitment
  (= A – C) |
| Cohesion policy funds | 347 550 | 346 475 | 189 574 | 156 901 | 157 976 |
| Natural Resources | 100 549 | 100 549 | 54 759 | 45 790 | 45 790 |
| Instrument for Pre-Accession Assistance | 10 958 | 7 357 | 4 086 | 3 271 | 6 872 |
| Total | 459 057 | 454 381 | 248 419 | 205 962 | 210 638 |

EUR millions

Financial perspective amounts 2007-2013

(A)

Legal commitments concluded

(B)

Budget commitments 2007-2010

(C)

Legal commitments less budget commitments

(= B – C)

Maximum commitment

(= A – C)

Cohesion policy funds

347 550

346 475

189 574

156 901

157 976

Natural Resources

100 549

100 549

54 759

45 790

45 790

Instrument for Pre-Accession Assistance

10 958

7 357

4 086

3 271

6 872

Total

459 057

454 381

248 419

205 962

210 638

5.7.2.   
  Protocols with Mediterranean countries

Protocols with Mediterranean countries

These commitments total EUR 263 million and relate to financial protocols with Mediterranean non-member countries. The amount included here is the difference between the total amount of the protocols signed and the amount of the budget commitments entered in the accounts. These protocols are international treaties that cannot be wound up without the agreement of both parties, although the winding-up process is on-going.

5.7.3.   
  Fisheries agreements

Fisheries agreements

These are commitments totalling EUR 130 million entered into with third countries for operations under international fisheries agreements.

5.7.4.   
  Galileo programme

Galileo programme

Galileo is a global navigation satellite system (GNSS) currently being built by the European Union and European Space Agency (ESA). The Galileo programme is now financed entirely from the EU budget and it is the Commission who manages the programme on behalf of the EU. It is expected that the first phase of the programme, the In-Orbit Validation (‘IOV’) phase, will be completed during 2012 and the transfer of the created assets to the Commission will take place then.

It should be noted that the Commission has, up to end 2010 and including the previous investment in the GJU, paid EUR 1 178 million towards the IOV phase of the Galileo programme. As this programme is currently still in the research phase, under the EU accounting rules, the money spent has been expensed and no intangible assets have been recognised. The total (indicative) Commission contribution foreseen for the next phase (‘FOC’) of the Galileo programme (from 2008 to 2013) is EUR 2 408 million.

5.7.5.   
  GMES programme

GMES programme

The Commission has entered into a contract with the ESA for the period from 2008 to 2013 for the implementation of the space component of Global Monitoring for Environment and Security (GMES). The total indicative amount for that period is EUR 624 million. In 2010, EUR 166 million of expenses have been incurred by ESA.

5.7.6.   
  TEN-T commitments

TEN-T commitments

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

5.7.7.   
  Other contractual commitments

Other contractual commitments

The amounts included correspond to amounts committed to be paid during the term of the contracts. Included here is the outstanding contractual obligation of EUR 83 million concerning the renovation costs of buildings of the Court of Justice, EUR 76 million concerning building related contracts of the Council, as well as EUR 434 million relating to building contracts of the Parliament and EUR 446 million from the Commission (concerning primarily two major building projects in Luxembourg). The other significant amount included here is EUR 2 654 million relating to procurement arrangements of the Fusion for Energy Agency (European Joint Undertaking for ITER and the Development of Fusion Energy) in the context of the ITER project.

5.8.   OPERATING LEASE COMMITMENTS

OPERATING LEASE COMMITMENTS

| EUR millions |
| --- |
| Description | Future amounts to be paid |
| < 1 year | 1- 5 years | > 5 years | Total |
| Buildings | 350 | 1 235 | 749 | 2 334 |
| IT materials and other equipment | 12 | 38 | 0 | 50 |
| Total | 362 | 1 273 | 749 | 2 384 |

EUR millions

Description

Future amounts to be paid

< 1 year

1- 5 years

> 5 years

Total

Buildings

350

1 235

749

2 334

IT materials and other equipment

12

38

0

50

Total

362

1 273

749

2 384

This heading covers buildings and other equipment rented under operating leasing contracts that do not meet the conditions for entry on the assets side of the balance sheet. The amounts indicated correspond to commitments still to be paid during the term of the contracts.

In 2010, EUR 363 million was recognised as an expense in the economic outturn account in respect of operating leases.

6.   FINANCIAL CORRECTIONS AND RECOVERIES

6.1.   INTRODUCTION

INTRODUCTION

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

6.1.1.   
  Financial corrections

Financial corrections

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

The processing of financial corrections follows these three main steps:

| (1) | The amount of the financial correction is being established through legal and contradictory procedure (‘in progress’); |
| --- | --- |

(1)

The amount of the financial correction is being established through legal and contradictory procedure (‘in progress’);

in progress

| (2) | The amount of the financial correction is established with certainty and is definitive, either ‘decided’ through a Commission decision, or ‘confirmed’ (i.e. accepted) by the Member State; |
| --- | --- |

(2)

The amount of the financial correction is established with certainty and is definitive, either ‘decided’ through a Commission decision, or ‘confirmed’ (i.e. accepted) by the Member State;

decided

confirmed

| (3) | the amount is ‘implemented’, by any of the following means: (a) following the issuance of a recovery order by the Commission, the amount is either paid by the Member State to the Commission, or offset by the Commission from future Commission payments to the concerned Member State; or (b) once the correction is accepted, the Member State deducts (withdraws) this amount from a subsequent payment claim to the Commission, before recovery proceedings are completed at national level (withdrawal), or once the recovery proceedings are completed at national levels and amounts are effectively recovered from the beneficiary (recovery at national level); in both cases (withdrawal or recovery at national level deducted by the Member State from a subsequent payment claim), the replacement of irregular expenditure by other eligible expenditure is allowed by the applicable regulations. According to accrual accounting principles, the validation of the recovery order or of the payment request, depending on the case, by the authorising officer in the accounting system is a necessary step to establish the implementation of financial corrections. However at programme closure when no re-use of the funds is possible by the Member State, the Commission implements the financial correction by decommitment. |
| --- | --- |

(3)

the amount is ‘implemented’, by any of the following means: (a) following the issuance of a recovery order by the Commission, the amount is either paid by the Member State to the Commission, or offset by the Commission from future Commission payments to the concerned Member State; or (b) once the correction is accepted, the Member State deducts (withdraws) this amount from a subsequent payment claim to the Commission, before recovery proceedings are completed at national level (withdrawal), or once the recovery proceedings are completed at national levels and amounts are effectively recovered from the beneficiary (recovery at national level); in both cases (withdrawal or recovery at national level deducted by the Member State from a subsequent payment claim), the replacement of irregular expenditure by other eligible expenditure is allowed by the applicable regulations. According to accrual accounting principles, the validation of the recovery order or of the payment request, depending on the case, by the authorising officer in the accounting system is a necessary step to establish the implementation of financial corrections. However at programme closure when no re-use of the funds is possible by the Member State, the Commission implements the financial correction by decommitment.

implemented

recovery

withdrawal)

recovery at national level

decommitment

(1)   Financial corrections in progress

Financial corrections in progress

The amount disclosed under financial corrections in progress is based on audit findings of the Commission and those of the Court of Auditors or OLAF, all of which are followed up by the relevant Directorate General through on-going contradictory procedures with the concerned Member States. This is a best and prudent estimate, taking into account the state of play of the follow up of the audits and the issuance of final position letters (or pre-suspension letters) at 31 December 2010. This amount will certainly be subject to change following the contradictory procedures, under which Member States are given the opportunity to present further evidence to support their claims.

(2)   Financial correction decided/confirmed

Financial correction decided/confirmed

In the area of Agriculture and Rural Development for the 2007-2013 period, the EAGF (i.e. European Agricultural Guarantee Fund) and the EAFRD (i.e. European Agricultural Fund for Rural Development) have replaced the EAGGF (i.e. European Agricultural Guidance and Guarantee Fund) (2000-2006). Financial corrections’ decisions are mainly launched as a result of the verification of the expenditure declared by the Member States that is subject to following clearance of accounts procedures:

Agriculture and Rural Development

| — | An annual financial clearance decision is adopted by the Commission to formally accept the paying agencies′ annual accounts on the basis of management verifications and certifications; |
| --- | --- |

—

An annual financial clearance decision is adopted by the Commission to formally accept the paying agencies′ annual accounts on the basis of management verifications and certifications;

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

—

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

| — | A financial clearance decision on payment execution is adopted by the Commission as a result of which financial corrections may be established for payments that do not respect legal or regulatory deadlines. |
| --- | --- |

—

A financial clearance decision on payment execution is adopted by the Commission as a result of which financial corrections may be established for payments that do not respect legal or regulatory deadlines.

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

Cohesion Policy

(3)   Implementation of Financial corrections

Implementation of Financial corrections

In the case of the EAGF, financial corrections are always implemented by deduction in the monthly declarations. For the EAFRD, the amounts recovered by the Member States themselves, as well as the financial corrections decided, may be re-used.

EAGF

Financial corrections under Cohesion Policy are implemented as follows:

Cohesion Policy

| — | The Member State accepts the correction required or proposed by the Commission: the Member State applies itself the financial correction, through deduction from a subsequent payment claim (see withdrawals and recoveries in section 6.1.1 (3) above). All amounts corrected by the Member States may then be re-used for other eligible operations, which have incurred regular expenditure. In these cases there is no impact in the Commission's accounts, as the level of EU funding to a specific programme is not reduced. The EU's financial interests are thus protected against irregularities and fraud. |
| --- | --- |

—

The Member State accepts the correction required or proposed by the Commission: the Member State applies itself the financial correction, through deduction from a subsequent payment claim (see withdrawals and recoveries in section 6.1.1 (3) above). All amounts corrected by the Member States may then be re-used for other eligible operations, which have incurred regular expenditure. In these cases there is no impact in the Commission's accounts, as the level of EU funding to a specific programme is not reduced. The EU's financial interests are thus protected against irregularities and fraud.

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

—

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

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

—

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

6.1.2.   
  Recoveries

Recoveries

Recovery of amounts is just a mean of implementing financial corrections that merit a separate disclosure given the importance attached to it by the Budget Authority.

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

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

Agriculture

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

Cohesion Policy

6.1.3.   
  Suspensions and interruptions of payments

Suspensions and interruptions of payments

In accordance with sector legislation the Commission may also:

| — | interrupt the payment deadline for a maximum period of 6 months for 2007-2013 programmes if:






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

—

interrupt the payment deadline for a maximum period of 6 months for 2007-2013 programmes if:

interrupt

(a)

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

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

(b)

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

| — | suspend all or part of an interim payment to a Member State for both 2000-2006 and 2007-2013 programmes in the following three cases:






  (a) | Serious deficiency in the management and control system of the programme; or |
| --- | --- | --- |

—

suspend all or part of an interim payment to a Member State for both 2000-2006 and 2007-2013 programmes in the following three cases:

suspend

(a)

Serious deficiency in the management and control system of the programme; or

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

(b)

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

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

(c)

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

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

6.1.4.   
  Other management types

Other management types

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

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

Note:

6.2.   FINANCIAL CORRECTIONS AND RECOVERIES UNDER AGRICULTURE AND RURAL DEVELOPMENT

FINANCIAL CORRECTIONS AND RECOVERIES UNDER AGRICULTURE AND RURAL DEVELOPMENT

6.2.1.   
  Financial corrections and recoveries decided in 2010

Financial corrections and recoveries decided in 2010

EAGF financial corrections decided in 2010

EAGF financial corrections decided in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF Clearance of accounts procedure: |
| Financial clearance and non-respected payment deadlines | 33 | 103 |
| Conformity clearance | 1 022 | 359 |
| Subtotal | 1 055 | 462 |

EUR millions

2010

2009

EAGF Clearance of accounts procedure:

EAGF Clearance of accounts procedure:

Financial clearance and non-respected payment deadlines

33

103

Conformity clearance

1 022

359

Subtotal

1 055

462

Rural Development financial corrections decided in 2010

Rural Development financial corrections decided in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Rural development financial corrections: |
| TRDI 2000-2006 | 49 | 11 |
| SAPARD 2000-2006 | 3 | 14 |
| EAFRD 2007-2013 | 20 | — |
| Subtotal | 73 | 25 |

EUR millions

2010

2009

Rural development financial corrections:

Rural development financial corrections:

TRDI 2000-2006

49

11

SAPARD 2000-2006

3

14

EAFRD 2007-2013

20

—

Subtotal

73

25

Recoveries confirmed in 2010

Recoveries confirmed in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF - irregularities | 178 | 163 |
| TRDI - recoveries | 10 | — |
| SAPARD - recoveries | 5 | — |
| EAFRD - irregularities | 98 | 47 |
| Subtotal | 292 | 210 |

EUR millions

2010

2009

EAGF - irregularities

178

163

TRDI - recoveries

10

—

SAPARD - recoveries

5

—

EAFRD - irregularities

98

47

Subtotal

292

210

Total financial corrections and recoveries decided/confirmed in 2010

Total financial corrections and recoveries decided/confirmed in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF: |
| Financial corrections | 1 055 | 462 |
| Recoveries | 178 | 163 |
| Subtotal EAGF | 1 233 | 625 |
| Rural Development: |
| Financial corrections | 73 | 25 |
| Recoveries | 114 | 47 |
| Subtotal Rural Development | 187 | 72 |
| Total | 1 420 | 697 |

EUR millions

2010

2009

EAGF:

EAGF:

Financial corrections

1 055

462

Recoveries

178

163

Subtotal EAGF

1 233

625

Rural Development:

Rural Development:

Financial corrections

73

25

Recoveries

114

47

Subtotal Rural Development

187

72

Total

1 420

697

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

All the above amounts are included in the economic outturn account of the Commission. The increase in conformity clearance procedures in 2010 follows a previous decrease between 2008 and 2009. This is primarily due to the absence of non-executed clearance decisions at end 2009. In fact 2008 included a non-executed clearance decision for an amount of EUR 178 million, which explained the decrease observed between 2008 and 2009. Similarly, 2010 figures include a non-executed clearance decision totalling EUR 471 million which was adopted before the year-end and for which financial execution will be in 2011. This explains the increase between 2009 and 2010.

Recoveries confirmed include for the first time in 2010 amounts from EAFRD, for a total of EUR 98 million, which explains the increase compared to 2009.

6.2.2.   
  Financial corrections and recoveries implemented in 2010

Financial corrections and recoveries implemented in 2010

EAGF financial corrections implemented in 2010

EAGF financial corrections implemented in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF Clearance of accounts procedure: |
| Financial clearance and non-respected payment deadlines | 33 | 103 |
| Conformity clearance | 728 | 600 |
| Total | 761 | 703 |

EUR millions

2010

2009

EAGF Clearance of accounts procedure:

EAGF Clearance of accounts procedure:

Financial clearance and non-respected payment deadlines

33

103

Conformity clearance

728

600

Total

761

703

Rural development financial corrections implemented in 2010

Rural development financial corrections implemented in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Rural development financial corrections: |
| TRDI 2000-2006 | 49 | 11 |
| SAPARD 2000-2006 | 3 | 14 |
| EAFRD 2007-2013 | 0 | 0 |
| Subtotal | 53 | 25 |

EUR millions

2010

2009

Rural development financial corrections:

Rural development financial corrections:

TRDI 2000-2006

49

11

SAPARD 2000-2006

3

14

EAFRD 2007-2013

0

0

Subtotal

53

25

Recoveries implemented in 2010

Recoveries implemented in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF - irregularities | 172 | 148 |
| TRDI - recoveries | 10 | — |
| SAPARD - recoveries | 5 | — |
| EAFRD - irregularities | 98 | 47 |
| Subtotal | 286 | 195 |

EUR millions

2010

2009

EAGF - irregularities

172

148

TRDI - recoveries

10

—

SAPARD - recoveries

5

—

EAFRD - irregularities

98

47

Subtotal

286

195

Total financial corrections and recoveries implemented in 2010

Total financial corrections and recoveries implemented in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF: |
| Financial corrections | 761 | 703 |
| Recoveries | 172 | 148 |
| Subtotal EAGF | 934 | 851 |
| Rural Development: |
| Financial corrections | 53 | 25 |
| Recoveries | 114 | 47 |
| Subtotal Rural Development | 167 | 72 |
| Total | 1 101 | 923 |

EUR millions

2010

2009

EAGF:

EAGF:

Financial corrections

761

703

Recoveries

172

148

Subtotal EAGF

934

851

Rural Development:

Rural Development:

Financial corrections

53

25

Recoveries

114

47

Subtotal Rural Development

167

72

Total

1 101

923

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

Concerning the financial execution of clearance decisions, the amounts are generally stable and show little variation from one year to the next. Concerning the EAFRD, which became operational in the programming period 2007-2013, the first wave of EU controls and audits has started. Financial correction amounts are expected to be reported in the coming years (see note 6.2.4 on financial corrections in progress).

As already mentioned above under recoveries confirmed, recoveries implemented include for the first time in 2010 amounts from EAFRD totalling EUR 98 million, which primarily explains the increase compared to 2009. This figure is expected to increase in the coming years for the reason mentioned above.

6.2.3.   
  Financial corrections – cumulative figures

Financial corrections – cumulative figures

EAGF financial corrections implemented in 2010 – cumulative figure 1999-2010

EAGF financial corrections implemented in 2010 – cumulative figure 1999-2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| EAGF Clearance of accounts procedures | 6 258 | 5 719 |
| Total | 6 258 | 5 719 |

EUR millions

2010

2009

EAGF Clearance of accounts procedures

EAGF Clearance of accounts procedures

6 258

5 719

Total

6 258

5 719

This amount represents the total financial impact of clearance of accounts procedures since this corrective mechanism has been implemented, i.e. from 1999 onwards.

Other financial corrections implemented in 2010 – cumulative figure 2000-2010

Other financial corrections implemented in 2010 – cumulative figure 2000-2010

| EUR millions |
| --- |
| | As at end 2010 | As at end 2009 |
| Other financial corrections: |
| TRDI 2000-2006 | 61 | 11 |
| SAPARD 2000-2006 | 17 | 14 |
| EAFRD 2007-2013 | 21 | 0 |
| Subtotal | 98 | 25 |

EUR millions

As at end 2010

As at end 2009

Other financial corrections:

Other financial corrections:

TRDI 2000-2006

61

11

SAPARD 2000-2006

17

14

EAFRD 2007-2013

21

0

Subtotal

98

25

The cumulative figure for EAGF clearance of accounts corrections represents the amounts formally decided by means of Commission's decisions. Clearance decisions No. 1 to No. 34 have been taken into account in the 2010 figure. It should be noted that all conformity clearance decisions have been formally taken while financial clearance decisions usually take a longer time to proceed and will impact the coming years.

6.2.4.   
  Financial corrections in progress

Financial corrections in progress

EAGF financial corrections in progress as at 31.12.2010

EAGF financial corrections in progress as at 31.12.2010

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2009 | New financial corrections in progress in 2010 | Financial corrections decided in 2010 | Adjustments on financial corrections decided or in progress as at 31.12.2009 | Financial corrections in progress as at 31.12.2010 |
| EAGF - future conformity and financial decisions | 2 763 | 670 | (1 029) | (115) | 2 288 |
| Total EAGF financial corrections in progress | 2 763 | 670 | (1 029) | (115) | 2 288 |

EUR millions

Financial corrections in progress as at 31.12.2009

New financial corrections in progress in 2010

Financial corrections decided in 2010

Adjustments on financial corrections decided or in progress as at 31.12.2009

Financial corrections in progress as at 31.12.2010

EAGF - future conformity and financial decisions

2 763

670

(1 029)

(115)

2 288

Total EAGF financial corrections in progress

2 763

670

(1 029)

(115)

2 288

The amount of EAGF financial corrections in progress end of 2010 shows the consolidation of the estimation method for future conformity decisions.

Other financial corrections in progress as at 31.12.2010

Other financial corrections in progress as at 31.12.2010

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2009 | New financial corrections in progress in 2010 | Financial corrections decided in 2010 | Adjustments on financial corrections decided or in progress as at 31.12.2009 | Financial corrections in progress as at 31.12.2010 |
| TRDI 2000-2006 | 12 | 45 | (49) | 0 | 7 |
| SAPARD 2000-2006 | 4 | 54 | (3) | 13 | 68 |
| EAFRD 2007-2013 | 114 | 55 | (57) | 11 | 123 |
| Total other financial corrections in progress | 130 | 154 | (109) | 24 | 198 |

EUR millions

Financial corrections in progress as at 31.12.2009

New financial corrections in progress in 2010

Financial corrections decided in 2010

Adjustments on financial corrections decided or in progress as at 31.12.2009

Financial corrections in progress as at 31.12.2010

TRDI 2000-2006

12

45

(49)

0

7

SAPARD 2000-2006

4

54

(3)

13

68

EAFRD 2007-2013

114

55

(57)

11

123

Total other financial corrections in progress

130

154

(109)

24

198

SAPARD and TRDI programmes are entering in a closure phase which explains the amount of financial corrections in progress. In addition audits and controls at EU level have been launched for EAFRD, which explains most of the amount.

EAGF recoveries in progress as at 31.12.2010

EAGF recoveries in progress as at 31.12.2010

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2009 | New financial corrections in progress in 2010 | Financial corrections decided in 2010 | Adjustments on financial corrections decided or in progress as at 31.12.2009 | Financial corrections in progress as at 31.12.2010 |
| EAGF - irregularities | 276 | 170 | (178) | 55 | 323 |
| Total recoveries in progress | 276 | 170 | (178) | 55 | 323 |

EUR millions

Financial corrections in progress as at 31.12.2009

New financial corrections in progress in 2010

Financial corrections decided in 2010

Adjustments on financial corrections decided or in progress as at 31.12.2009

Financial corrections in progress as at 31.12.2010

EAGF - irregularities

276

170

(178)

55

323

Total recoveries in progress

276

170

(178)

55

323

As irregularities confirmed and implemented are disclosed in note 6.2.1 and 6.2.2, it is important to show in this section how the future amounts of irregularities progress.

Other recoveries in progress as at 31.12.2010

Other recoveries in progress as at 31.12.2010

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2009 | New financial corrections in progress in 2010 | Financial corrections decided in 2010 | Adjustments on financial corrections decided or in progress as at 31.12.2009 | Financial corrections in progress as at 31.12.2010 |
| TRDI 2000-2006 | 5 | 6 | (10) | 7 | 7 |
| SAPARD 2000-2006 | 88 | 52 | (5) | (41) | 94 |
| EAFRD 2007-2013 | 8 | 60 | (98) | 52 | 22 |
| Total recoveries in progress | 101 | 118 | (114) | 18 | 123 |

EUR millions

Financial corrections in progress as at 31.12.2009

New financial corrections in progress in 2010

Financial corrections decided in 2010

Adjustments on financial corrections decided or in progress as at 31.12.2009

Financial corrections in progress as at 31.12.2010

TRDI 2000-2006

5

6

(10)

7

7

SAPARD 2000-2006

88

52

(5)

(41)

94

EAFRD 2007-2013

8

60

(98)

52

22

Total recoveries in progress

101

118

(114)

18

123

6.3.   FINANCIAL CORRECTIONS UNDER COHESION POLICY

FINANCIAL CORRECTIONS UNDER COHESION POLICY

In the Agriculture and Rural development policy, recoveries (not related to financial corrections) are common. However, under the Cohesion policy, recovery orders are almost exclusively used to implement those financial corrections decided by the Commission and that result in a net reduction of the EU funding.

The results of the Member States′ own checks of the Cohesion policy expenditure are reported in note 6.5. Note also that the amount of financial corrections 2009 for the programming period 2000-2006 linked to TRDI and SAPARD are now disclosed in the section Agriculture and Rural development (see note 6.2), together with EAFRD.

6.3.1.   
  Financial corrections confirmed in 2010

Financial corrections confirmed in 2010

Financial corrections decided/confirmed in 2010

Financial corrections decided/confirmed in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Cohesion policy (EU work) |
| 1994-1999 programmes | 136 | 521 |
| 2000-2006 programmes | 788 | 1 865 |
| 2007-2013 programmes | 2 | 0 |
| Subtotal | 925 | 2 386 |
| A breakdown of these amounts per Member State is disclosed in Annex 3. |

EUR millions

2010

2009

Cohesion policy (EU work)

Cohesion policy (EU work)

1994-1999 programmes

136

521

2000-2006 programmes

788

1 865

2007-2013 programmes

2

0

Subtotal

925

2 386

A breakdown of these amounts per Member State is disclosed in Annex 3.

Financial corrections confirmed/decided in 2010 and their implementation in 2010

Financial corrections confirmed/decided in 2010 and their implementation in 2010

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG | EAGGF Guidance | TOTAL |
| Financial Corrections 1994-99: |
| Implemented by decommitment/deduction at closure | 2 | 0 | — | 0 | — | 2 |
| Implemented by recovery order | 118 | — | 4 | 3 | 3 | 128 |
| Not yet implemented | 5 | 0 | — | — | 0 | 6 |
| Subtotal 1994-99 period | 125 | 0 | 4 | 3 | 3 | 136 |
| Financial Corrections 2000-2006: |
| Implemented by decommitment/deduction at closure | — | 11 | — | — | — | 11 |
| Implemented by Member States | — | — | 35 | 87 | — | 122 |
| Implemented by recovery order | 0 | 0 | — | — | 30 | 30 |
| Not yet implemented | 368 | 246 | 8 | 2 | — | 624 |
| Subtotal 2000-2006 period | 368 | 258 | 43 | 89 | 30 | 788 |
| Financial Corrections 2007-2013: |
| Implemented by decommitment/deduction at closure | — | — | — | — | — | — |
| Implemented by Member States | 1 | — | 1 | — | — | 2 |
| Implemented by recovery order | — | — | — | — | — | — |
| Not yet implemented | 0 | — | 0 | — | — | 0 |
| Subtotal 2007-2013 period | 1 | — | 1 | — | — | 2 |
| Total financial corrections confirmed in 2010 | 494 | 258 | 49 | 91 | 33 | 925 |
| Total financial corrections decided in 2009 | 2 061 | 86 | 180 | 46 | 13 | 2 386 |
| Out of the total amount of EUR 925 million confirmed in 2010, EUR 2 million were confirmed in previous years but have not been reported before and EUR 44 million represent adjustments on previously-reported amounts. |

EUR millions

ERDF

CF

ESF

FIFG

EAGGF Guidance

TOTAL

Financial Corrections 1994-99:

Implemented by decommitment/deduction at closure

2

0

—

0

—

2

Implemented by recovery order

118

—

4

3

3

128

Not yet implemented

5

0

—

—

0

6

Subtotal 1994-99 period

125

0

4

3

3

136

Financial Corrections 2000-2006:

Implemented by decommitment/deduction at closure

—

11

—

—

—

11

Implemented by Member States

—

—

35

87

—

122

Implemented by recovery order

0

0

—

—

30

30

Not yet implemented

368

246

8

2

—

624

Subtotal 2000-2006 period

368

258

43

89

30

788

Financial Corrections 2007-2013:

Implemented by decommitment/deduction at closure

—

—

—

—

—

—

Implemented by Member States

1

—

1

—

—

2

Implemented by recovery order

—

—

—

—

—

—

Not yet implemented

0

—

0

—

—

0

Subtotal 2007-2013 period

1

—

1

—

—

2

Total financial corrections confirmed in 2010

494

258

49

91

33

925

Total financial corrections decided in 2009

2 061

86

180

46

13

2 386

Out of the total amount of EUR 925 million confirmed in 2010, EUR 2 million were confirmed in previous years but have not been reported before and EUR 44 million represent adjustments on previously-reported amounts.

The amount of financial corrections confirmed/decided in the year and implemented by issuance of a recovery order by the Commission (i.e. cash reimbursed to the Commission) is EUR 158 million, EUR 128 million for the 1994-99 period, and EUR 30 million for the 2000-06 period (2009: EUR 146 million). It should be noted that implementation by means of a recovery order represent only a limited amount of financial corrections (i.e. 20 % of the amount implemented in 2010) since the applicable sectoral legislation foresees the possibility for the Member State to accept the financial correction proposed by the Commission and then to replace the irregular expenditure by a regular one- thus meaning that no recovery order needs to be issued by the Commission. Recovery orders are only issued by the Commission in the cases where the Member State refuses the financial correction, or at the stage of programme closure when it is no longer possible for the Member State to submit other expenditure to replace the irregular one.

For ERDF, the large difference between confirmed/decided corrections in 2009 and 2010 is due to a large correction in Spain (approximately EUR 1,5 billion), which was confirmed by the Member State at the end of 2009. This correction concluded an important action plan initiated in 2004 concerning management and second level verifications on public procurement issues across twenty Spanish programmes. It increased significantly the amounts of corrections reported in 2009. From 2010 onwards, the amounts linked to the 2000-2006 period will decrease as the closure period is winding down. Corrections reported will be linked to finalisation of procedures started in previous years, as well as to the results of closure proceedings and audits.

Concerning the ESF, the lower amount of financial corrections for the programming period 1994-1999 is due to the fact that Commission's services are reaching the end of the closure process. For the programming period 2000-2006, 2010 was the year in which the vast majority of the programmes have submitted their closure documents. Therefore amounts of financial corrections will only be identified and confirmed after the ongoing analysis made by the Commission's services of the Member States documents is completed.

Regarding FIFG, the audit performed on central authorities in Spain at the end of 2009 led to the confirmation in 2010 of an amount of EUR 87 million which was deducted by the Member State from the final cost statement received at end 2010.

6.3.2.   
  Financial corrections implemented in 2010

Financial corrections implemented in 2010

Financial corrections implemented in 2010

Financial corrections implemented in 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Cohesion policy (EU work) |
| 1994-1999 programmes | 476 | 300 |
| 2000-2006 programmes | 259 | 384 |
| 2007-2013 programmes | 2 | 0 |
| Subtotal | 737 | 684 |
| A breakdown of these amounts per Member State is disclosed in Annex 4. |

EUR millions

2010

2009

Cohesion policy (EU work)

Cohesion policy (EU work)

1994-1999 programmes

476

300

2000-2006 programmes

259

384

2007-2013 programmes

2

0

Subtotal

737

684

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

It should be noted that the above amounts, in particular for the programming period 2000-06, do not include financial corrections reported by the Member States in final payment claims received by the Commission in 2010, which are in the process of being validated. At this stage, the financial correction is indeed implemented by the Member State who certifies the deduction of the financial correction amount from the final payment claim amount. However, in the context of programme closure, the validation of the claim by the authorising officer in the accounting system is subject to longer regulatory deadlines before it can be fully processed and payments be made by the Commission. Payments claims received before the year-end 2010 and not yet authorised include financial corrections deducted for a total amount of EUR 2,3 billion (ERDF: EUR 2 155 millions; Cohesion Fund: EUR 105 millions; and ESF: EUR 24 millions). Payment claims will be processed end of 2011 and beginning of 2012.

Financial corrections implemented in 2010 (confirmed/decided in 2010 and in previous years)

Financial corrections implemented in 2010 (confirmed/decided in 2010 and in previous years)

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG | EAGGF Guidance | Total 2010 |
| Financial Corrections 1994-99 period: |
| Confirmed in 2010 | 120 | 0 | 4 | 3 | 2 | 129 |
| Confirmed previous years | 342 | 4 | 1 | — | 1 | 347 |
| Subtotal 1994-99 period | 462 | 4 | 5 | 3 | 3 | 476 |
| Financial Corrections 2000-2006: |
| Confirmed in 2010 | 0 | 11 | 35 | 87 | 30 | 164 |
| Confirmed previous years | 79 | 6 | 1 | — | 8 | 95 |
| Subtotal 2000-2006 period | 80 | 18 | 36 | 87 | 38 | 259 |
| Financial Corrections 2007-2013: |
| Confirmed in 2010 | 1 | — | 1 | — | — | 1 |
| Confirmed previous years | — | — | — | — | — | — |
| Subtotal 2007-2013 period | 1 | — | 1 | — | — | 1 |
| Total financial corrections implemented in 2010 | 542 | 21 | 42 | 90 | 41 | 737 |
| Total financial corrections implemented in 2009 | 334 | 89 | 206 | 50 | 5 | 684 |
| Out of the amount of EUR 737 million reported as financial correction implemented in 2010, EUR 1 million was implemented in previous years but has not been reported before. |

EUR millions

ERDF

CF

ESF

FIFG

EAGGF Guidance

Total 2010

Financial Corrections 1994-99 period:

Confirmed in 2010

120

0

4

3

2

129

Confirmed previous years

342

4

1

—

1

347

Subtotal 1994-99 period

462

4

5

3

3

476

Financial Corrections 2000-2006:

Confirmed in 2010

0

11

35

87

30

164

Confirmed previous years

79

6

1

—

8

95

Subtotal 2000-2006 period

80

18

36

87

38

259

Financial Corrections 2007-2013:

Confirmed in 2010

1

—

1

—

—

1

Confirmed previous years

—

—

—

—

—

—

Subtotal 2007-2013 period

1

—

1

—

—

1

Total financial corrections implemented in 2010

542

21

42

90

41

737

Total financial corrections implemented in 2009

334

89

206

50

5

684

Out of the amount of EUR 737 million reported as financial correction implemented in 2010, EUR 1 million was implemented in previous years but has not been reported before.

Concerning ERDF, it should be noted that the large correction in Spain totalling EUR 1,5 billon referred to in note 6.3.1 was certified by the Member State in February 2010 as accounted for in the local accounting systems of the relevant programmes. This amount was then deducted from the 20 final payment claims introduced in September 2010. However these payment claims being still under authorising process, they have not been taken into account in the above implementation figures. So are the majority of the claims received for the 2000-06 closure.

Concerning the ESF, all financial corrections confirmed in 2010 for the programming period 1994-1999 have been implemented in the same year. Moreover there are no outstanding amounts of financial corrections to be implemented concerning that programming period. The amounts of financial corrections for the programming period 2000-2006 confirmed in previous years will be identified and cleared within the closure process that is ongoing.

6.3.3.   
  Financial corrections – cumulative figures and implementation rate

Financial corrections – cumulative figures and implementation rate

Financial corrections confirmed/decided – cumulative figures

Financial corrections confirmed/decided – cumulative figures

| EUR millions |
| --- |
| | 1994-1999 Period | 2000-2006 Period | 2007-2013 Period | Total as at end 2010 | Total as at end 2009 |
| ERDF | 1 758 | 4 165 | 1 | 5 924 | 5 430 |
| Cohesion Fund | 273 | 490 | — | 763 | 506 |
| ESF | 397 | 1 174 | 1 | 1 572 | 1 522 |
| FIFG | 100 | 96 | — | 195 | 104 |
| EAGGF Guidance | 124 | 41 | — | 165 | 132 |
| Total | 2 652 | 5 965 | 2 | 8 619 | 7 694 |

EUR millions

1994-1999 Period

2000-2006 Period

2007-2013 Period

Total as at end 2010

Total as at end 2009

ERDF

1 758

4 165

1

5 924

5 430

Cohesion Fund

273

490

—

763

506

ESF

397

1 174

1

1 572

1 522

FIFG

100

96

—

195

104

EAGGF Guidance

124

41

—

165

132

Total

2 652

5 965

2

8 619

7 694

A breakdown of the total amount per Member State is disclosed in Annex 3.

Financial corrections implemented – cumulative figures

Financial corrections implemented – cumulative figures

| EUR millions |
| --- |
| | 1994-1999 Period | 2000-2006 Period | 2007-2013 Period | Total as at end 2010 | Total as at end 2009 |
| ERDF | 1 736 | 1 972 | 1 | 3 709 | 3 167 |
| Cohesion Fund | 266 | 227 | — | 493 | 472 |
| ESF | 395 | 1 146 | 1 | 1 542 | 1 500 |
| FIFG | 100 | 94 | — | 194 | 104 |
| EAGGF Guidance | 124 | 41 | — | 165 | 124 |
| Total | 2 621 | 3 480 | 2 | 6 102 | 5 366 |

EUR millions

1994-1999 Period

2000-2006 Period

2007-2013 Period

Total as at end 2010

Total as at end 2009

ERDF

1 736

1 972

1

3 709

3 167

Cohesion Fund

266

227

—

493

472

ESF

395

1 146

1

1 542

1 500

FIFG

100

94

—

194

104

EAGGF Guidance

124

41

—

165

124

Total

2 621

3 480

2

6 102

5 366

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

Most of the programmes and irregularities for the programming period 1994-99 are closed cases, and amounts are therefore expected to decrease in the future. Many deductions were withdrawn by the Member States from their final payment requests for 2000-06 programmes however the payment claims are still under validation, which explains why they are not included in the above amounts. They will be reported as implemented when the payments will be validated, in 2011 and in 2012 for the most complex files. The corrections for the current programming period 2007-13 should increase as a result of the current controls on the spot.

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

Financial corrections confirmed/decided as at 31 December 2010 but not yet implemented and implementation rates as at 31 December 2010 (cumulative figures)

Financial corrections confirmed/decided as at 31 December 2010 but not yet implemented and implementation rates as at 31 December 2010 (cumulative figures)

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG | EAGGF Guidance | Total 2010 | Total 2009 |
| Financial corrections 1994-1999 programmes |
| Financial corrections confirmed/decided | 1 758 | 273 | 397 | 100 | 124 | 2 652 | 2 516 |
| Financial corrections implemented | 1 736 | 266 | 395 | 100 | 124 | 2 621 | 2 145 |
| Financial corrections confirmed/decided but not yet implemented | 22 | 8 | 2 | — | 0 | 31 | 371 |
| Rate of implementation | 99 % | 97 % | 100 % | 100 % | 100 % | 99 % | 85 % |
| Financial corrections 2000-2006 programmes |
| Financial corrections confirmed/decided | 4 165 | 490 | 1 174 | 96 | 41 | 5 965 | 5 177 |
| Financial corrections implemented | 1 972 | 227 | 1 146 | 94 | 41 | 3 480 | 3 221 |
| Financial corrections confirmed/decided but not yet implemented | 2 192 | 263 | 28 | 2 | — | 2 485 | 1 956 |
| Rate of implementation | 47 % | 46 % | 98 % | 98 % | 100 % | 58% | 62% |
| Financial corrections 2007-2013 programmes |
| Financial corrections confirmed/decided | 1 | — | 1 | — | — | 2 | — |
| Financial corrections implemented | 1 | — | 1 | — | — | 2 | — |
| Financial corrections confirmed/decided but not yet implemented | 0 | — | 0 | — | — | 0 | — |
| Rate of implementation | 69 % | N/A | 98 % | N/A | N/A | 84 % | N/A |
| Total financial corrections |
| Financial corrections confirmed/decided | 5 924 | 764 | 1 571 | 195 | 165 | 8 619 | 7 694 |
| Financial corrections implemented | 3 709 | 493 | 1 542 | 194 | 165 | 6 102 | 5 366 |
| Financial corrections confirmed/decided but not yet implemented | 2 214 | 271 | 30 | 2 | 0 | 2 516 | 2 327 |
| Rate of implementation | 63 % | 65 % | 98 % | 99 % | 100 % | 71 % | 70 % |

EUR millions

ERDF

CF

ESF

FIFG

EAGGF Guidance

Total 2010

Total 2009

Financial corrections 1994-1999 programmes

Financial corrections 1994-1999 programmes

Financial corrections confirmed/decided

1 758

273

397

100

124

2 652

2 652

2 516

2 516

Financial corrections implemented

1 736

266

395

100

124

2 621

2 621

2 145

2 145

Financial corrections confirmed/decided but not yet implemented

22

8

2

—

0

31

31

371

371

Rate of implementation

99 %

97 %

100 %

100 %

100 %

99 %

99 %

85 %

85 %

Financial corrections 2000-2006 programmes

Financial corrections 2000-2006 programmes

Financial corrections confirmed/decided

4 165

490

1 174

96

41

5 965

5 965

5 177

5 177

Financial corrections implemented

1 972

227

1 146

94

41

3 480

3 480

3 221

3 221

Financial corrections confirmed/decided but not yet implemented

2 192

263

28

2

—

2 485

2 485

1 956

1 956

Rate of implementation

47 %

46 %

98 %

98 %

100 %

58%

58%

62%

62%

Financial corrections 2007-2013 programmes

Financial corrections 2007-2013 programmes

Financial corrections confirmed/decided

1

—

1

—

—

2

2

—

—

Financial corrections implemented

1

—

1

—

—

2

2

—

—

Financial corrections confirmed/decided but not yet implemented

0

—

0

—

—

0

0

—

—

Rate of implementation

69 %

N/A

98 %

N/A

N/A

84 %

84

N/A

N/A

Total financial corrections

Total financial corrections

Financial corrections confirmed/decided

5 924

764

1 571

195

165

8 619

8 619

7 694

7 694

Financial corrections implemented

3 709

493

1 542

194

165

6 102

6 102

5 366

5 366

Financial corrections confirmed/decided but not yet implemented

2 214

271

30

2

0

2 516

2 516

2 327

2 327

Rate of implementation

Rate of implementation

63 %

63 %

65 %

65 %

98 %

98 %

99 %

99 %

100 %

100 %

71 %

71 %

70 %

70 %

The level of implementation during the programming period 1994-1999 is explained by the issuance during 2010 of most of the recovery orders needed to implement the financial corrections decisions adopted at the end of 2009 (pending at closure of the accounts 2009), or the new corrections confirmed/ decided during the year.

Concerning the programming period 2000-2006, the low implementation rate is explained by the ongoing closure process whereby payment claims received end of 2010 are not yet authorised, and the related financial corrections for a total amount of EUR 2,3 billion cannot be taken into account in the 2010 implementation figures.

6.3.4.   
  Financial corrections in progress

Financial corrections in progress

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2009 | New financial corrections in progress in 2010 | Financial corrections decided in 2010 | Adjustments on financial corrections decided or in progress as at 31.12.2009 | Financial corrections in progress as at 31.12.2010 |
| Structural and Cohesion funds (1994-1999, 2000-2006 and 2007-2013 programmes) |
| ERDF | 430 | 135 | (212) | (156) | 197 |
| Cohesion Fund | 149 | 206 | (21) | (72) | 262 |
| ESF | 326 | 9 | (42) | (10) | 284 |
| FIFG | 2 | — | (1) | 0 | 0 |
| EAGGF Guidance | 63 | 4 | (33) | (31) | 4 |
| Total | 971 | 354 | (309) | (269) | 747 |

EUR millions

Financial corrections in progress as at 31.12.2009

New financial corrections in progress in 2010

Financial corrections decided in 2010

Adjustments on financial corrections decided or in progress as at 31.12.2009

Financial corrections in progress as at 31.12.2010

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

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

ERDF

430

135

(212)

(156)

197

Cohesion Fund

149

206

(21)

(72)

262

ESF

326

9

(42)

(10)

284

FIFG

2

—

(1)

0

0

EAGGF Guidance

63

4

(33)

(31)

4

Total

971

354

(309)

(269)

747

Concerning the ERDF, many of the procedures in progress in the previous years were finalised in 2010 with the application of financial corrections or the adjustments of the amounts. Furthermore, 2010 was characterised as a transition year for the two programming periods; the conclusion of procedures for 2000-2006 leading to a decrease of amounts in progress and the initiation of new procedures (somewhat less at this stage) for 2007-2013. Thus, the amounts of financial corrections in progress this year are lower compared to last year.

Concerning the ESF, most of the EUR 9 million of new cases refers to the 2000-2006 programming period as all the operational programmes concerned are reaching their closure phase. The processing of financial corrections will be dealt with in the closure process. Nevertheless, half of the on-going procedures concern the 2007-2013 programming period. These were estimated to be at EUR 1 (provisional amount) as the amount to be corrected still needs to be identified.

In addition to the above-mentioned figure, an amount of EUR 1 437 million has been reported by Member States and represents potential recoveries following the detection of irregular claims on structural funds. It is based on the formal reports submitted by the member States in accordance with Commission Regulation No 1681/94. However the prospects of recovery in individual cases cannot be assessed with sufficient accuracy based on the information forwarded by Member States. In addition there is a risk of overlap with the figures above-disclosed which is difficult to quantify as Member States are not obliged to distinguish in their reporting between potential recoveries resulting from EU's work and those resulting from their own controls.

6.3.5.   
  Interruptions and suspension of payments

Interruptions and suspension of payments

Concerning the ERDF, 49 interruption decisions for payment deadlines were taken in 2010 for a total amount of EUR 2 156 million. Payments were released for 41 cases representing EUR 2 057 million. 8 cases were still ongoing at year-end, covering an amount of EUR 99 million.

Concerning the ESF, 12 interruption decisions for payment deadlines were taken in 2010 for a total amount of EUR 255 million, all relating to the programming period 2007-2013. Payments were released for 6 cases, representing EUR 94 million. 6 cases are still ongoing for an amount of EUR 161 million.

The breakdown of interruption cases per Member State in 2010 is as follows:

| EUR millions |
| --- |
| | ERDF | ESF | Total |
| Interruptions - closed cased as at 31.12.2010 |
| Germany | 175 | — | 175 |
| Spain | 1 477 | 74 | 1 552 |
| Italy | 84 | — | 84 |
| Luxembourg | — | 1 | 1 |
| Hungary | 33 | — | 33 |
| Portugal | 103 | — | 103 |
| Romania | — | 18 | 18 |
| United Kingdom | 184 | — | 184 |
| Subtotal closed cases | 2 057 | 94 | 2 151 |
| Interruptions - open cases as at 31.12.2010 |
| Belgium | — | 3 | 3 |
| Bulgaria | 15 | — | 15 |
| Germany | 43 | 69 | 112 |
| Italy | — | 72 | 72 |
| Austria | — | 17 | 17 |
| United Kingdom | 41 | — | 41 |
| Subtotal open cases | 99 | 161 | 260 |
| Total interruptions | 2 156 | 255 | 2 411 |
| Data disclosed in this table represent the situation as at 15 February 2011 |

EUR millions

ERDF

ESF

Total

Interruptions - closed cased as at 31.12.2010

Interruptions - closed cased as at 31.12.2010

Germany

175

—

175

Spain

1 477

74

1 552

Italy

84

—

84

Luxembourg

—

1

1

Hungary

33

—

33

Portugal

103

—

103

Romania

—

18

18

United Kingdom

184

—

184

Subtotal closed cases

2 057

94

2 151

Interruptions - open cases as at 31.12.2010

Interruptions - open cases as at 31.12.2010

Belgium

—

3

3

Bulgaria

15

—

15

Germany

43

69

112

Italy

—

72

72

Austria

—

17

17

United Kingdom

41

—

41

Subtotal open cases

99

161

260

Total interruptions

2 156

255

2 411

Data disclosed in this table represent the situation as at 15 February 2011

In addition 6 suspension decisions were taken during 2010 for the ESF (Belgium, Spain, and France), and payments were resumed before the year-end for Spain only.

6.4.   OTHER RECOVERIES

OTHER RECOVERIES

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

OTHER RECOVERIES CONFIRMED IN 2010

OTHER RECOVERIES CONFIRMED IN 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Other management types: |
| — | external actions |

EUR millions

2010

2009

Other management types:

Other management types:

—

external actions

137

81

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

—

internal policies

188

202

Total other recoveries confirmed

325

283

OTHER RECOVERIES IMPLEMENTED IN 2010

OTHER RECOVERIES IMPLEMENTED IN 2010

| EUR millions |
| --- |
| | 2010 | 2009 |
| Other management types: |
| — | external actions |

EUR millions

2010

2009

Other management types:

Other management types:

—

external actions

136

81

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

—

internal policies

163

202

Total other recoveries implemented

299

283

6.5.   RECOVERY AND FINANCIAL CORRECTION ACITIVITIES BY MEMBER STATES FOR STRUCTURAL ACTIONS OR COHESION POLICY

RECOVERY AND FINANCIAL CORRECTION ACITIVITIES BY MEMBER STATES FOR STRUCTURAL ACTIONS OR COHESION POLICY

In the area of cohesion policy, the corrections effected by Member States following their own or EU audits are not recorded in the Commission's accounting system because Member States can reuse these amounts for other eligible expenditure. Nonetheless, Member States are requested to provide the Commission with updated information on withdrawals, recoveries and pending recoveries of Structural Funds both for individual years and cumulatively for the period 2000-2006, and covering all four funds (ERDF, ESF, EAGGF Guidance and FIFG). However, they are not obliged to separately identify corrections resulting from EU work. For this reason the financial corrections made by Member States are not added to the Commission's.

As the period 2000-2006 is now in its closure phase, a phase during which proof of deduction is requested in relation to all irregularities, Member States are not required to separately submit to the Commission information on withdrawals, recoveries and pending recoveries for the year 2010. Nevertheless, this additional information was received in March 2011 from Greece, Belgium, Hungary, Portugal and for Inter-regional programmes. This information is taken into account in this section.

Based on data received so far, in terms of EU contribution, Member States have reported a total of some EUR 5,1 billion of cumulative financial corrections resulting from their national audit work for the 2000-2006 programmes (of which withdrawals total some EUR 4 billion and recoveries approximately EUR 1.1 billion).

The on-the-spot audit work undertaken by DG Regional Policy under the 2008 Action Plan to audit the national systems of Member States for recoveries related to the 2000-2006 programming period was completed in 2010 for the six remaining Member States, having covered thus all 25 concerned Member States (there was no reporting obligation for Bulgaria and Romania for the 2000-2006 period). The results of this exercise, as well as the audits carried out by the Court of Auditors, in the last two annual reports, showed that Member States′ authorities generally follow the requirements, although significant weaknesses still existed in respect of the completeness of data and the system for recording and reporting irregularities for some 2000-2006 programmes in Italy, Spain, France and the Netherlands. To a lesser extent, weaknesses also existed in programmes in the UK, Slovenia, Finland, Sweden and Latvia. Even if improvements have been identified in all Member States during the years 2007-2010 by the Commission audits, the Commission remains prudent at closure and requested all programmes authorities to report on the follow-up (including financial corrections) that was made at national level for all irregularities registered for each programme. The Commission will not close programmes until it assesses this information as being consistent and complete.

There is a risk of overlap for the 2000-2006 period between the figures reported for financial corrections resulting from the work of EU bodies (audits by the Commission and the Court of Auditors and OLAF investigations) and those reported by Member States resulting from their own work. This is because a large proportion of the financial corrections resulting from the work of EU bodies is accepted by the Member States and implemented by them without a formal Commission decision, by withdrawing the expenditure concerned from their expenditure declarations. As Member States are not obliged to distinguish between corrections resulting from EU bodies′ work from those due to their own controls and audits in the 2000-2006 reporting, the extent of this overlap cannot be precisely quantified. Furthermore, the actual implementation by the Member State may not be in the same year as the Member State's acceptance of the financial correction. Therefore, the possible overlap remains only an estimation. A comparison, Member State by Member State, between the Member States′ figures for 2010 and the amounts of corrections resulting from EU bodies′ work which Member States have accepted for the same year, suggests that the amount of the overlap cannot exceed EUR 65 million (2009: EUR 465 million).

In the 2007-2013 programming period, there is a regulatory requirement for Member States to report annually on recoveries and withdrawals through IT systems SFC 2007. This means that the Commission receives data electronically directly from the Member States at 31 March each year. In its guidance to Member States, the Commission also proposed to separately identify corrections resulting from EU bodies′ work, in order to avoid any overlap in reporting. As reported by Member States to the Commission at 31 March 2011, the total amounts (EU share) recovered by Member States from beneficiaries and withdrawn from certified expenditure presented to the Commission in 2010 (recoveries, for EUR 35 million), or withdrawn from 2010 payment claims before the recovery process is completed at national level (withdrawals, for EUR 189 million), as well as the pending recoveries (EUR 41 million) at the end of 2010, are EUR 265 million:

| EUR million |
| --- |
| EU 27 2007-2013 (2) | Withdrawals resulting from MS work | Withdrawals resulting from EU bodies | Total withdrawals | Recoveries resulting from MS work | Recoveries resulting from EU bodies | Total Recoveries | Total pending recoveries declared in 2010 | Total declared by MS |
| ERDF/CF
   (3) | 151 | 5 | 156 | 29 | 2 | 31 | 25 | 212 |
| ESF | 31 | 2 | 33 | 4 | 0 | 4 | 15 | 52 |
| EFF | 0 | 0 | 0 | 1 | 0 | 1 | 0 | 1 |
| Total | 183 | 7 | 189 | 34 | 2 | 35 | 41 | 265 |

EUR million

EU 27 2007-2013 (2)

2

Withdrawals resulting from MS work

Withdrawals resulting from EU bodies

Total withdrawals

Recoveries resulting from MS work

Recoveries resulting from EU bodies

Total Recoveries

Total pending recoveries declared in 2010

Total declared by MS

ERDF/CF
   (3)

ERDF/CF

3

151

5

156

156

29

2

31

31

25

25

212

212

ESF

ESF

31

2

33

33

4

0

4

4

15

15

52

52

EFF

EFF

0

0

0

0

1

0

1

1

0

0

1

1

Total

183

7

189

34

2

35

41

265

The Commission has planned an audit on recoveries as from the second semester of 2011 so as to review, for all Funds, the corrective mechanism systems put in place by certifying authorities and to assess the assurance the Commission can place on the reported figures, using a sample of programmes and Member States selected on the basis of a risk analysis.

Note 6 –   Annex 1: Total financial corrections and recoveries decided in 2010 for EAGF - Breakdown per Member State

Note 6 –

Annex 1: Total financial corrections and recoveries decided in 2010 for EAGF - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Financial clearance | Conformity clearance | Irregularities declared | Total 2010 | Total 2009 |
| Belgium | 0 | — | 4 | 4 | 15 |
| Bulgaria | 0 | 17 | 3 | 20 | 5 |
| Czech Republic | 0 | 1 | 0 | 1 | 1 |
| Denmark | 0 | 10 | 3 | 12 | 104 |
| Germany | –1 | 16 | 12 | 28 | 17 |
| Estonia | — | — | 0 | 0 | 0 |
| Ireland | –1 | 0 | 7 | 7 | 4 |
| Greece | 4 | 460 | 14 | 477 | 21 |
| Spain | 8 | 52 | 23 | 83 | 106 |
| France | –1 | 39 | 28 | 67 | 111 |
| Italy | 4 | 39 | 35 | 78 | 15 |
| Cyprus | — | 1 | 0 | 1 | 0 |
| Latvia | 0 | — | 0 | 0 | 0 |
| Lithuania | 0 | 0 | 2 | 2 | 4 |
| Luxembourg | 0 | 1 | 0 | 1 | 0 |
| Hungary | 0 | 8 | 1 | 8 | 22 |
| Malta | 0 | — | 0 | 0 | 0 |
| Netherlands | –1 | 47 | 5 | 51 | 36 |
| Austria | 0 | 1 | 1 | 2 | 3 |
| Poland | 0 | 50 | 2 | 52 | 13 |
| Portugal | 2 | 40 | 16 | 58 | 18 |
| Romania | 11 | 38 | 6 | 55 | 14 |
| Slovenia | 0 | 4 | 1 | 5 | 2 |
| Slovakia | 0 | 0 | 0 | 0 | 1 |
| Finland | 0 | 2 | 1 | 2 | 2 |
| Sweden | 0 | 3 | 2 | 5 | 2 |
| United Kingdom | 8 | 194 | 11 | 213 | 109 |
| Total decided | 33 | 1 022 | 178 | 1 233 | 625 |

EUR millions

Member State

Financial clearance

Conformity clearance

Irregularities declared

Total 2010

Total 2009

Belgium

0

—

4

4

15

Bulgaria

0

17

3

20

5

Czech Republic

0

1

0

1

1

Denmark

0

10

3

12

104

Germany

–1

16

12

28

17

Estonia

—

—

0

0

0

Ireland

–1

0

7

7

4

Greece

4

460

14

477

21

Spain

8

52

23

83

106

France

–1

39

28

67

111

Italy

4

39

35

78

15

Cyprus

—

1

0

1

0

Latvia

0

—

0

0

0

Lithuania

0

0

2

2

4

Luxembourg

0

1

0

1

0

Hungary

0

8

1

8

22

Malta

0

—

0

0

0

Netherlands

–1

47

5

51

36

Austria

0

1

1

2

3

Poland

0

50

2

52

13

Portugal

2

40

16

58

18

Romania

11

38

6

55

14

Slovenia

0

4

1

5

2

Slovakia

0

0

0

0

1

Finland

0

2

1

2

2

Sweden

0

3

2

5

2

United Kingdom

8

194

11

213

109

Total decided

33

1 022

178

1 233

625

Note 6 –   Annex 2: Total financial corrections and recoveries implemented in 2010 for EAGF - Breakdown per Member State

Note 6 –

Annex 2: Total financial corrections and recoveries implemented in 2010 for EAGF - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Financial clearance and non-respected payment deadlines | Conformity clearance | Irregularities declared by Member States (repaid to EU) | Total 2010 | Total 2009 |
| Belgium | 0 | 0 | 3 | 3 | 14 |
| Bulgaria | 0 | — | 5 | 6 | 1 |
| Czech Republic | 0 | 0 | 1 | 1 | 0 |
| Denmark | 0 | 10 | 3 | 12 | 105 |
| Germany | –1 | 16 | 10 | 26 | 18 |
| Estonia | — | — | 0 | 0 | 0 |
| Ireland | –1 | 1 | 5 | 5 | 5 |
| Greece | 4 | 136 | 10 | 150 | 196 |
| Spain | 8 | 92 | 30 | 130 | 59 |
| France | –1 | 90 | 30 | 120 | 82 |
| Italy | 4 | 5 | 23 | 33 | 177 |
| Cyprus | — | 1 | 0 | 1 | 1 |
| Latvia | 0 | — | 0 | 0 | 0 |
| Lithuania | 0 | 2 | 1 | 4 | 2 |
| Luxembourg | 0 | 1 | 0 | 1 | 0 |
| Hungary | 0 | 24 | 2 | 26 | 9 |
| Malta | 0 | — | 0 | 0 | 0 |
| Netherlands | –1 | 46 | 5 | 51 | 9 |
| Austria | 0 | 3 | 1 | 3 | 1 |
| Poland | 0 | 95 | 1 | 97 | 2 |
| Portugal | 2 | 4 | 18 | 24 | 7 |
| Romania | 11 | — | 6 | 16 | 12 |
| Slovenia | 0 | — | 1 | 1 | 2 |
| Slovakia | 0 | 0 | 1 | 1 | 0 |
| Finland | 0 | 2 | 1 | 2 | 2 |
| Sweden | 0 | 3 | 2 | 5 | 14 |
| United Kingdom | 8 | 195 | 12 | 215 | 133 |
| Total implemented | 33 | 728 | 172 | 934 | 851 |

EUR millions

Member State

Financial clearance and non-respected payment deadlines

Conformity clearance

Irregularities declared by Member States (repaid to EU)

Total 2010

Total 2009

Belgium

0

0

3

3

14

Bulgaria

0

—

5

6

1

Czech Republic

0

0

1

1

0

Denmark

0

10

3

12

105

Germany

–1

16

10

26

18

Estonia

—

—

0

0

0

Ireland

–1

1

5

5

5

Greece

4

136

10

150

196

Spain

8

92

30

130

59

France

–1

90

30

120

82

Italy

4

5

23

33

177

Cyprus

—

1

0

1

1

Latvia

0

—

0

0

0

Lithuania

0

2

1

4

2

Luxembourg

0

1

0

1

0

Hungary

0

24

2

26

9

Malta

0

—

0

0

0

Netherlands

–1

46

5

51

9

Austria

0

3

1

3

1

Poland

0

95

1

97

2

Portugal

2

4

18

24

7

Romania

11

—

6

16

12

Slovenia

0

—

1

1

2

Slovakia

0

0

1

1

0

Finland

0

2

1

2

2

Sweden

0

3

2

5

14

United Kingdom

8

195

12

215

133

Total implemented

33

728

172

934

851

Note 6 –   Annex 3: Total financial corrections confirmed in 2010 for Structural Actions - Breakdown per Member State

Note 6 –

Annex 3: Total financial corrections confirmed in 2010 for Structural Actions - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Cumulative end 2009 | Financial corrections confirmed in 2010 | Cumulative end 2010 |
| ERDF | CF | ESF | FIFG | EAGGF Guidance | Total Year 2010 |
| 1994-1999 | 2 516 | 125 | 0 | 4 | 3 | 3 | 136 | 2 652 |
| Belgium | 5 | — | — | — | — | — | 0 | 5 |
| Denmark | 3 | — | — | — | — | — | 0 | 3 |
| Germany | 339 | 0 | — | — | 0 | 1 | 1 | 340 |
| Ireland | 42 | — | — | — | — | — | 0 | 42 |
| Greece | 526 | 1 | 0 | — | — | 0 | 2 | 528 |
| Spain | 548 | 116 | 0 | 0 | — | 1 | 117 | 664 |
| France | 84 | — | — | 4 | — | 0 | 4 | 88 |
| Italy | 505 | 0 | — | — | — | 0 | 0 | 505 |
| Luxembourg | 5 | — | — | — | — | — | 0 | 5 |
| Netherlands | 177 | — | — | — | — | — | 0 | 177 |
| Austria | 2 | — | — | — | — | — | 0 | 2 |
| Portugal | 137 | 2 | — | — | 1 | 1 | 4 | 141 |
| Finland | 1 | — | — | — | — | — | 0 | 1 |
| Sweden | 1 | — | — | — | — | — | 0 | 1 |
| United Kingdom | 131 | 6 | — | — | 1 | 0 | 7 | 138 |
| INTERREG | 10 | 0 | — | — | — | — | 0 | 10 |
| 2000-2006 | 5 178 | 368 | 258 | 43 | 89 | 30 | 788 | 5 965 |
| Belgium | 10 | 0 | — | — | — | — | 0 | 10 |
| Bulgaria | 2 | — | 18 | — | — | — | 18 | 21 |
| Czech Republic | 0 | 4 | 7 | — | — | — | 11 | 11 |
| Denmark | 0 | — | — | — | — | — | 0 | 0 |
| Germany | 12 | 0 | — | 0 | 0 | — | 1 | 13 |
| Estonia | 0 | 0 | — | 0 | — | — | 0 | 0 |
| Ireland | 42 | 2 | 1 | — | — | — | 2 | 44 |
| Greece | 920 | 40 | 0 | 0 | — | — | 40 | 961 |
| Spain | 2 503 | 170 | 104 | 2 | 87 | — | 363 | 2 865 |
| France | 261 | 16 | — | 0 | — | 9 | 26 | 287 |
| Italy | 825 | 97 | — | 4 | 1 | 2 | 105 | 930 |
| Cyprus | — | — | — | — | — | — | 0 | 0 |
| Latvia | 4 | — | 1 | — | 0 | — | 1 | 4 |
| Lithuania | 2 | — | 0 | — | — | — | 0 | 2 |
| Luxembourg | 2 | — | — | — | — | — | 0 | 2 |
| Hungary | 52 | 0 | — | — | — | — | 0 | 52 |
| Malta | — | — | — | — | — | — | 0 | 0 |
| Netherlands | 2 | — | — | — | — | — | 0 | 2 |
| Austria | — | — | — | — | — | — | 0 | 0 |
| Poland | 134 | 0 | 111 | 1 | 0 | — | 112 | 246 |
| Portugal | 126 | 0 | 13 | 0 | — | 18 | 31 | 157 |
| Romania | 10 | — | 2 | — | — | — | 2 | 12 |
| Slovenia | 2 | — | — | — | — | — | 0 | 2 |
| Slovakia | 39 | 0 | 2 | — | — | — | 2 | 41 |
| Finland | 0 | — | — | — | 0 | — | 0 | 1 |
| Sweden | 11 | 0 | — | — | — | — | 0 | 11 |
| United Kingdom | 217 | 29 | — | 36 | — | 1 | 65 | 283 |
| INTERREG | 1 | 9 | — | — | — | — | 9 | 10 |
| 2007-2013 | 0 | 1 | 0 | 1 | 0 | — | 2 | 2 |
| Belgium | — | — | — | — | — | — | — | — |
| Bulgaria | — | — | — | — | — | — | — | — |
| Czech Republic | — | — | — | — | — | — | — | — |
| Denmark | — | — | — | 0 | — | — | 0 | 0 |
| Germany | — | — | — | — | — | — | — | — |
| Estonia | — | 0 | — | — | — | — | 0 | 0 |
| Ireland | — | — | — | 0 | — | — | 0 | 0 |
| Greece | — | — | — | — | — | — | — | — |
| Spain | — | — | — | — | — | — | — | — |
| France | — | — | — | 0 | — | — | 0 | 0 |
| Italy | — | — | — | — | — | — | — | — |
| Cyprus | — | — | — | — | — | — | — | — |
| Latvia | — | — | — | — | — | — | — | — |
| Lithuania | — | — | — | — | — | — | — | — |
| Luxembourg | — | — | — | 0 | — | — | 0 | 0 |
| Hungary | — | 0 | — | 1 | — | — | 1 | 1 |
| Malta | — | — | — | — | — | — | — | — |
| Netherlands | — | — | — | — | — | — | — | — |
| Austria | — | — | — | — | — | — | — | — |
| Poland | — | 0 | — | 0 | — | — | 0 | 0 |
| Portugal | — | 0 | — | 0 | — | — | 1 | 1 |
| Romania | — | — | — | — | — | — | — | — |
| Slovenia | — | — | — | — | — | — | — | — |
| Slovakia | — | — | — | — | — | — | — | — |
| Finland | — | — | — | — | — | — | — | — |
| Sweden | — | — | — | — | — | — | — | — |
| United Kingdom | — | — | — | — | — | — | — | — |
| INTERREG | — | — | — | — | — | — | — | — |
| Total confirmed | 7 694 | 494 | 258 | 49 | 91 | 33 | 925 | 8 619 |

EUR millions

Member State

Cumulative end 2009

Financial corrections confirmed in 2010

Cumulative end 2010

ERDF

CF

ESF

FIFG

EAGGF Guidance

Total Year 2010

1994-1999

1994-1999

2 516

2 516

125

125

0

0

4

4

3

3

3

3

136

136

2 652

2 652

Belgium

5

—

—

—

—

—

0

5

Denmark

3

—

—

—

—

—

0

3

Germany

339

0

—

—

0

1

1

340

Ireland

42

—

—

—

—

—

0

42

Greece

526

1

0

—

—

0

2

528

Spain

548

116

0

0

—

1

117

664

France

84

—

—

4

—

0

4

88

Italy

505

0

—

—

—

0

0

505

Luxembourg

5

—

—

—

—

—

0

5

Netherlands

177

—

—

—

—

—

0

177

Austria

2

—

—

—

—

—

0

2

Portugal

137

2

—

—

1

1

4

141

Finland

1

—

—

—

—

—

0

1

Sweden

1

—

—

—

—

—

0

1

United Kingdom

131

6

—

—

1

0

7

138

INTERREG

10

0

—

—

—

—

0

10

2000-2006

2000-2006

5 178

5 178

368

368

258

258

43

43

89

89

30

30

788

788

5 965

5 965

Belgium

10

0

—

—

—

—

0

10

Bulgaria

2

—

18

—

—

—

18

21

Czech Republic

0

4

7

—

—

—

11

11

Denmark

0

—

—

—

—

—

0

0

Germany

12

0

—

0

0

—

1

13

Estonia

0

0

—

0

—

—

0

0

Ireland

42

2

1

—

—

—

2

44

Greece

920

40

0

0

—

—

40

961

Spain

2 503

170

104

2

87

—

363

2 865

France

261

16

—

0

—

9

26

287

Italy

825

97

—

4

1

2

105

930

Cyprus

—

—

—

—

—

—

0

0

Latvia

4

—

1

—

0

—

1

4

Lithuania

2

—

0

—

—

—

0

2

Luxembourg

2

—

—

—

—

—

0

2

Hungary

52

0

—

—

—

—

0

52

Malta

—

—

—

—

—

—

0

0

Netherlands

2

—

—

—

—

—

0

2

Austria

—

—

—

—

—

—

0

0

Poland

134

0

111

1

0

—

112

246

Portugal

126

0

13

0

—

18

31

157

Romania

10

—

2

—

—

—

2

12

Slovenia

2

—

—

—

—

—

0

2

Slovakia

39

0

2

—

—

—

2

41

Finland

0

—

—

—

0

—

0

1

Sweden

11

0

—

—

—

—

0

11

United Kingdom

217

29

—

36

—

1

65

283

INTERREG

1

9

—

—

—

—

9

10

2007-2013

2007-2013

0

0

1

1

0

0

1

1

0

0

—

—

2

2

2

2

Belgium

—

—

—

—

—

—

—

—

Bulgaria

—

—

—

—

—

—

—

—

Czech Republic

—

—

—

—

—

—

—

—

Denmark

—

—

—

0

—

—

0

0

Germany

—

—

—

—

—

—

—

—

Estonia

—

0

—

—

—

—

0

0

Ireland

—

—

—

0

—

—

0

0

Greece

—

—

—

—

—

—

—

—

Spain

—

—

—

—

—

—

—

—

France

—

—

—

0

—

—

0

0

Italy

—

—

—

—

—

—

—

—

Cyprus

—

—

—

—

—

—

—

—

Latvia

—

—

—

—

—

—

—

—

Lithuania

—

—

—

—

—

—

—

—

Luxembourg

—

—

—

0

—

—

0

0

Hungary

—

0

—

1

—

—

1

1

Malta

—

—

—

—

—

—

—

—

Netherlands

—

—

—

—

—

—

—

—

Austria

—

—

—

—

—

—

—

—

Poland

—

0

—

0

—

—

0

0

Portugal

—

0

—

0

—

—

1

1

Romania

—

—

—

—

—

—

—

—

Slovenia

—

—

—

—

—

—

—

—

Slovakia

—

—

—

—

—

—

—

—

Finland

—

—

—

—

—

—

—

—

Sweden

—

—

—

—

—

—

—

—

United Kingdom

—

—

—

—

—

—

—

—

INTERREG

—

—

—

—

—

—

—

—

Total confirmed

7 694

494

258

49

91

33

925

8 619

Note 6 –   Annex 4: Total financial corrections implemented in 2010: Structural Actions – Breakdown per Member State

Note 6 –

Annex 4: Total financial corrections implemented in 2010: Structural Actions – Breakdown per Member State

| EUR millions |
| --- |
| Member State | Cumulative end 2009 | Financial corrections implemented in 2010 | Cumulative end 2010 |
| ERDF | CF | ESF | FIFG | EAGGF Guidance | Total Year 2010 |
| 1994-1999 | 2 144 | 462 | 4 | 5 | 3 | 3 | 476 | 2 621 |
| Belgium | 6 | — | — | — | — | — | — | 6 |
| Denmark | 4 | — | — | — | — | — | — | 4 |
| Germany | 300 | 37 | — | — | 0 | 1 | 38 | 338 |
| Ireland | 40 | — | — | — | — | — | — | 40 |
| Greece | 521 | 1 | 3 | — | — | 0 | 4 | 525 |
| Spain | 293 | 363 | 1 | 0 | — | 1 | 365 | 658 |
| France | 85 | — | — | 4 | — | 0 | 4 | 89 |
| Italy | 483 | 21 | — | — | — | — | 21 | 504 |
| Luxembourg | 4 | — | — | 1 | — | — | 1 | 5 |
| Netherlands | 177 | — | — | — | — | — | — | 177 |
| Austria | 2 | — | — | — | — | — | — | 2 |
| Portugal | 118 | 20 | — | — | 1 | 1 | 23 | 141 |
| Finland | 1 | 0 | — | — | — | — | 0 | 1 |
| Sweden | 1 | — | — | — | — | — | — | 1 |
| United Kingdom | 108 | 11 | — | — | 1 | 0 | 13 | 120 |
| INTERREG | 2 | 7 | — | — | — | — | 7 | 9 |
| 2000-2006 | 3 222 | 80 | 18 | 36 | 87 | 38 | 259 | 3 480 |
| Belgium | 8 | — | — | 0 | — | — | 0 | 8 |
| Bulgaria | 2 | — | — | — | — | — | — | 2 |
| Czech Republic | 0 | — | — | — | — | — | — | 0 |
| Denmark | 0 | — | — | — | — | — | — | 0 |
| Germany | 10 | 0 | — | — | — | — | 0 | 10 |
| Estonia | 0 | — | — | 0 | — | — | 0 | 0 |
| Ireland | 26 | — | — | — | — | — | — | 26 |
| Greece | 904 | — | — | — | — | — | — | 904 |
| Spain | 940 | — | 16 | 0 | 87 | 8 | 111 | 1 051 |
| France | 239 | — | — | — | — | 9 | 9 | 248 |
| Italy | 686 | 79 | — | 0 | — | 2 | 82 | 768 |
| Cyprus | 0 | — | — | — | — | — | — | 0 |
| Latvia | 3 | — | 1 | — | — | — | 1 | 4 |
| Lithuania | 1 | — | 0 | — | — | — | 0 | 1 |
| Luxembourg | 2 | — | — | — | — | — | — | 2 |
| Hungary | 41 | — | — | — | — | — | — | 41 |
| Malta | 0 | — | — | — | — | — | — | 0 |
| Netherlands | 0 | — | — | — | — | 1 | 1 | 1 |
| Austria | 0 | — | — | — | — | — | — | 0 |
| Poland | 90 | — | — | — | — | — | — | 90 |
| Portugal | 95 | — | 1 | — | — | 18 | 18 | 113 |
| Romania | 8 | — | 0 | — | — | — | 0 | 8 |
| Slovenia | 2 | — | — | — | — | — | — | 2 |
| Slovakia | 1 | — | — | — | — | — | — | 1 |
| Finland | 0 | — | — | — | — | — | — | 0 |
| Sweden | 11 | — | — | — | — | — | — | 11 |
| United Kingdom | 151 | — | — | 36 | — | 1 | 37 | 188 |
| INTERREG | 0 | 0 | — | — | — | — | 0 | 0 |
| 2007-2013 | 0 | 1 | 0 | 1 | 0 | — | 2 | 2 |
| Belgium | — | — | — | — | — | — | — | — |
| Bulgaria | — | — | — | — | — | — | — | — |
| Czech Republic | — | — | — | — | — | — | — | — |
| Denmark | — | — | — | 0 | — | — | 0 | 0 |
| Germany | — | — | — | — | — | — | — | — |
| Estonia | — | 0 | — | — | — | — | 0 | 0 |
| Ireland | — | — | — | 0 | — | — | 0 | 0 |
| Greece | — | — | — | — | — | — | — | — |
| Spain | — | — | — | — | — | — | — | — |
| France | — | — | — | 0 | — | — | 0 | 0 |
| Italy | — | — | — | — | — | — | — | — |
| Cyprus | — | — | — | — | — | — | — | — |
| Latvia | — | — | — | — | — | — | — | — |
| Lithuania | — | — | — | — | — | — | — | — |
| Luxembourg | — | — | — | — | — | — | — | — |
| Hungary | — | — | — | 1 | — | — | 1 | 1 |
| Malta | — | — | — | — | — | — | — | — |
| Netherlands | — | — | — | — | — | — | — | — |
| Austria | — | — | — | — | — | — | — | — |
| Poland | — | 0 | — | — | — | — | 0 | 0 |
| Portugal | — | 0 | — | 0 | — | — | 1 | 1 |
| Romania | — | — | — | — | — | — | — | — |
| Slovenia | — | — | — | — | — | — | — | — |
| Slovakia | — | — | — | — | — | — | — | — |
| Finland | — | — | — | — | — | — | — | — |
| Sweden | — | — | — | — | — | — | — | — |
| United Kingdom | — | — | — | — | — | — | — | — |
| INTERREG | — | — | — | — | — | — | — | — |
| Total implemented | 5 366 | 542 | 21 | 42 | 90 | 41 | 737 | 6 102 |

EUR millions

Member State

Cumulative end 2009

Financial corrections implemented in 2010

Cumulative end 2010

ERDF

CF

ESF

FIFG

EAGGF Guidance

Total Year 2010

1994-1999

1994-1999

2 144

2 144

462

462

4

4

5

5

3

3

3

3

476

476

2 621

2 621

Belgium

6

—

—

—

—

—

—

6

Denmark

4

—

—

—

—

—

—

4

Germany

300

37

—

—

0

1

38

338

Ireland

40

—

—

—

—

—

—

40

Greece

521

1

3

—

—

0

4

525

Spain

293

363

1

0

—

1

365

658

France

85

—

—

4

—

0

4

89

Italy

483

21

—

—

—

—

21

504

Luxembourg

4

—

—

1

—

—

1

5

Netherlands

177

—

—

—

—

—

—

177

Austria

2

—

—

—

—

—

—

2

Portugal

118

20

—

—

1

1

23

141

Finland

1

0

—

—

—

—

0

1

Sweden

1

—

—

—

—

—

—

1

United Kingdom

108

11

—

—

1

0

13

120

INTERREG

2

7

—

—

—

—

7

9

2000-2006

2000-2006

3 222

3 222

80

80

18

18

36

36

87

87

38

38

259

259

3 480

3 480

Belgium

8

—

—

0

—

—

0

8

Bulgaria

2

—

—

—

—

—

—

2

Czech Republic

0

—

—

—

—

—

—

0

Denmark

0

—

—

—

—

—

—

0

Germany

10

0

—

—

—

—

0

10

Estonia

0

—

—

0

—

—

0

0

Ireland

26

—

—

—

—

—

—

26

Greece

904

—

—

—

—

—

—

904

Spain

940

—

16

0

87

8

111

1 051

France

239

—

—

—

—

9

9

248

Italy

686

79

—

0

—

2

82

768

Cyprus

0

—

—

—

—

—

—

0

Latvia

3

—

1

—

—

—

1

4

Lithuania

1

—

0

—

—

—

0

1

Luxembourg

2

—

—

—

—

—

—

2

Hungary

41

—

—

—

—

—

—

41

Malta

0

—

—

—

—

—

—

0

Netherlands

0

—

—

—

—

1

1

1

Austria

0

—

—

—

—

—

—

0

Poland

90

—

—

—

—

—

—

90

Portugal

95

—

1

—

—

18

18

113

Romania

8

—

0

—

—

—

0

8

Slovenia

2

—

—

—

—

—

—

2

Slovakia

1

—

—

—

—

—

—

1

Finland

0

—

—

—

—

—

—

0

Sweden

11

—

—

—

—

—

—

11

United Kingdom

151

—

—

36

—

1

37

188

INTERREG

0

0

—

—

—

—

0

0

2007-2013

2007-2013

0

0

1

1

0

0

1

1

0

0

—

2

2

2

2

Belgium

—

—

—

—

—

—

—

—

Bulgaria

—

—

—

—

—

—

—

—

Czech Republic

—

—

—

—

—

—

—

—

Denmark

—

—

—

0

—

—

0

0

Germany

—

—

—

—

—

—

—

—

Estonia

—

0

—

—

—

—

0

0

Ireland

—

—

—

0

—

—

0

0

Greece

—

—

—

—

—

—

—

—

Spain

—

—

—

—

—

—

—

—

France

—

—

—

0

—

—

0

0

Italy

—

—

—

—

—

—

—

—

Cyprus

—

—

—

—

—

—

—

—

Latvia

—

—

—

—

—

—

—

—

Lithuania

—

—

—

—

—

—

—

—

Luxembourg

—

—

—

—

—

—

—

—

Hungary

—

—

—

1

—

—

1

1

Malta

—

—

—

—

—

—

—

—

Netherlands

—

—

—

—

—

—

—

—

Austria

—

—

—

—

—

—

—

—

Poland

—

0

—

—

—

—

0

0

Portugal

—

0

—

0

—

—

1

1

Romania

—

—

—

—

—

—

—

—

Slovenia

—

—

—

—

—

—

—

—

Slovakia

—

—

—

—

—

—

—

—

Finland

—

—

—

—

—

—

—

—

Sweden

—

—

—

—

—

—

—

—

United Kingdom

—

—

—

—

—

—

—

—

INTERREG

—

—

—

—

—

—

—

—

Total implemented

5 366

542

21

42

90

41

737

6 102

7.   FINANCIAL RISK MANAGEMENT

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

| — | the treasury operations carried out by the European Commission in order to implement the EU budget; |
| --- | --- |

—

the treasury operations carried out by the European Commission in order to implement the EU budget;

| — | lending and borrowing activities carried out by the European Commission through Macro Financial Assistance (MFA), Balance of Payments (BOP) and Euratom actions; |
| --- | --- |

—

lending and borrowing activities carried out by the European Commission through Macro Financial Assistance (MFA), Balance of Payments (BOP) and Euratom actions;

| — | the Guarantee Fund for external actions; and |
| --- | --- |

—

the Guarantee Fund for external actions; and

| — | lending and borrowing, as well as treasury activities carried out by the European Union through the European Coal & Steel Community (in Liquidation). |
| --- | --- |

—

lending and borrowing, as well as treasury activities carried out by the European Union through the European Coal & Steel Community (in Liquidation).

7.1.   RISK MANAGEMENT POLICIES

RISK MANAGEMENT POLICIES

7.1.1.   
  Treasury operations

Treasury operations

The rules and principles for the management of the Commission's treasury operations are laid down in the Council Regulation 1150/2000 (amended by Council Regulations 2028/2004 and 105/2009) and in the Financial Regulation (Council Regulation 1605/2002, amended by Council Regulations 1995/2006, 1525/2007 and 1081/2010) and its Implementing Rules (Commission Regulation 2342/2002, amended by Commission Regulations 1261/2005, 1248/2006 and 478/2007).

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

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

—

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

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

—

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

| — | Bank accounts opened in the name of the Commission may not be overdrawn. |
| --- | --- |

—

Bank accounts opened in the name of the Commission may not be overdrawn.

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

—

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

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

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

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

BUFI – provisionally cashed fines

BUFI – provisionally cashed fines

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

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

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

(a)

ensure that the funds are easily available when needed, while

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

(b)

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

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

7.1.2.   
  Borrowing and lending activities (MFA, BOP and Euratom)

Borrowing and lending activities (MFA, BOP and Euratom)

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

7.1.3.   
  Guarantee Fund

Guarantee Fund

The rules and principles for the asset management of the Guarantee Fund (see note 2.3.3) are laid out in the Convention between the European Commission and the European Investment Bank (EIB) dated 25 November 1994 and the subsequent amendments dated 17/23 September 1996, 8 May 2002, 25 February 2008 and 9 November 2010. The Guarantee Fund operates only in EUR. It exclusively invests in this currency in order to avoid any foreign currency risk. Management of the assets is based upon the traditional rules of prudence adhered to for financial activities. It is required to pay particular attention to reducing the risks and to ensuring that the managed assets can be sold or transferred without significant delay, taking into account the commitments covered.

2.3.3

7.1.4.   
  ECSC in liquidation

ECSC in liquidation

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

7.2.   MARKET RISK

MARKET RISK

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

7.2.1.   
  Currency risk

Currency risk

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

7.2.1.1.   Treasury operations

Treasury operations

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

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

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

BUFI – provisionally cashed fines

BUFI – provisionally cashed fines

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

7.2.1.2.   Borrowing and lending activities (MFA, BOP and Euratom)

Borrowing and lending activities (MFA, BOP and Euratom)

Most financial assets and liabilities are in EUR, so in these cases the EU has no foreign currency risk. However, the EU does give loans in USD through the financial instrument Euratom, which are financed by borrowings with an equivalent amount in USD (back-to-back operation). At the balance sheet date the EU has no foreign currency risk with regard to Euratom.

7.2.1.3.   Guarantee Fund

Guarantee Fund

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

7.2.1.4.   ECSC in liquidation

ECSC in liquidation

The ECSC in liquidation has a small foreign currency net exposure of EUR equivalent 1,43 million arising from EUR equivalent 1,39 million housing loans and EUR equivalent 0,04 million current account balances.

7.2.2.   
  Interest rate risk

Interest rate risk

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

7.2.2.1.   Treasury operations

Treasury operations

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

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

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

BUFI – provisionally cashed fines

BUFI – provisionally cashed fines

There are no bonds with variable interest rates in the BUFI portfolio. Zero coupon bonds represented 69 % of the bond portfolio at the balance sheet date.

7.2.2.2.   Borrowing and lending activities (MFA, BOP and Euratom)

Borrowing and lending activities (MFA, BOP and Euratom)

Borrowings and loans with variable interest rates

Borrowings and loans with variable interest rates

Due to the nature of its borrowing and lending activities, the EU has significant interest-bearing assets and liabilities. MFA and Euratom borrowings issued at variable rates expose the EU to interest rate risk. However, the interest rate risks that arise from borrowings are offset by equivalent loans in terms and conditions (back-to-back). At the balance sheet date, the EU has loans (expressed in nominal amounts) with variable rates of EUR 0,86 billion (2009: EUR 0,96 billion), with a re-pricing taking place every 6 months.

Borrowings and loans with fixed interest rates

Borrowings and loans with fixed interest rates

The EU also has MFA and Euratom loans with fixed rates totalling EUR 110 million in 2010 (2009: EUR 110 million) and which have a final maturity date between one and five years (EUR 25 million) and more than five years (EUR 85 million). More significantly, the EU has ten loans under the financial instrument BOP with fixed interest rates totalling EUR 12,05 billion in 2010 (2009: EUR 9,2 billion) and with a final maturity up to one year (EUR 2 billion), between one and five years (EUR 5,7 billion) and more than five years (EUR 4,35 billion).

7.2.2.3.   Guarantee Fund

Guarantee Fund

Debt securities within the Guarantee Fund issued at variable interest rates are subject to the volatility effects of these rates, whereas debt securities at fixed rates have a risk with regard to their fair value. Fixed rate bonds represent approximately 93 % of the investment portfolio at the balance sheet date (2009: 97 %).

7.2.2.4.   ECSC in liquidation

ECSC in liquidation

Due to the nature of its activities, the ECSC in liquidation is exposed to interest rate risk. The interest rate risks that arise from borrowings are generally offset by equivalent loans in terms and conditions. As regards asset management operations, fixed rate bonds represent approximately 92 % of the securities portfolio at the balance sheet date (2009: 97 %).

7.3.   CREDIT RISK

CREDIT RISK

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

7.3.1.   
  Treasury operations

Treasury operations

Most of the Commission's treasury resources are kept, in accordance with Council Regulation 1150/2000 on own resources, in the accounts opened by Member States for the payment of their contributions (own resources). All such accounts are held with Member States′ treasuries or national central banks. These institutions carry the lowest credit (or counterparty) risk for the Commission as the exposure is with its Member States. For the part of the Commission's treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is instructed on a just-in-time basis and is automatically managed by the treasury cash management system. Minimum cash levels, proportional to the average amount of daily payments executed from it, are kept on each account. As a consequence the amounts kept overnight on these accounts remain constantly at low levels (overall between EUR 20 million and EUR 100 million on average, spread over more than 20 accounts) and so ensure the Commission′s risk exposure is limited. These amounts should be viewed with regard to the overall treasury balances which fluctuate between EUR 1 billion and EUR 35 billion, and with an overall amount of payments executed in 2010 that totalled EUR 120 billion.

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

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

—

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

| — | For commercial banks that have been specifically selected for the deposit of provisionally cashed fines (restricted cash), a minimum long-term rating of S&P AA or equivalent is also required as a general rule and specific measures are applied in case banks in this group are subject to downgrade. |
| --- | --- |

—

For commercial banks that have been specifically selected for the deposit of provisionally cashed fines (restricted cash), a minimum long-term rating of S&P AA or equivalent is also required as a general rule and specific measures are applied in case banks in this group are subject to downgrade.

| — | In the course of 2009 the Commission's treasury services have put in place an alternative system for the management of provisionally cashed fines, with the specific objective of reducing risk in this area. Further to Commission's Decision C(2009) 4264 fines imposed from the 1st January 2010, are now managed under the new system and no longer deposited with commercial banks. |
| --- | --- |

—

In the course of 2009 the Commission's treasury services have put in place an alternative system for the management of provisionally cashed fines, with the specific objective of reducing risk in this area. Further to Commission's Decision C(2009) 4264 fines imposed from the 1st January 2010, are now managed under the new system and no longer deposited with commercial banks.

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

—

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

| — | The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures were adopted in the context of the financial crisis, and kept in place during 2010. |
| --- | --- |

—

The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures were adopted in the context of the financial crisis, and kept in place during 2010.

BUFI – provisionally cashed fines

BUFI – provisionally cashed fines

For investments from provisionally cashed fines we take on exposure to credit risk which is the risk that a counterparty will be unable to pay amounts in full when due. The highest concentration of exposure is towards France and Germany as each of these countries represents respectively 69 % and 25 % of the total volume of the portfolio.

The main investment limits are for benchmark countries (currently France and Germany, rated AAA/Aaa): up to 100 % of the portfolio. For other authorised issuers (a minimum rating of Aa2 (Moody's or equivalent) is required): up to 25 % of the portfolio.

7.3.2.   
  Borrowing and lending activities (MFA, BOP and Euratom)

Borrowing and lending activities (MFA, BOP and Euratom)

Exposure to credit risk is managed firstly by obtaining country guarantees in the case of Euratom, then through the Guarantee Fund (MFA & Euratom) and ultimately through the Budget of the EU (BOP, and should the other measures not be sufficient, MFA & Euratom). The Own Resource legislation in force during 2010 fixed the ceiling for the GNI resource at 1,23 % of Member States′ GNI and during 2010 1,12 % was actually used to cover payment appropriations. This means that at 31 December 2010 there existed an available margin of 0,11 % to cover this guarantee. The Guarantee Fund for external actions was set up in 1994 to cover default risks related to borrowings which finance loans to countries outside the European Union. In any case, the exposure to credit risk is mitigated by the possibility to call on the EU budget in case a debtor would be unable to reimburse the amounts due in full. To this end the EU is entitled to call upon all the Member States to ensure compliance with the EU's legal obligation towards its lenders.

The main beneficiaries of these loans are Hungary, Romania and Latvia. These countries represent approximately 42 %, 30 % and 22 % respectively of the total volume of loans. As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. Accordingly, the operating unit will be able to enter into deals only with eligible banks having sufficient counterparty limits.

7.3.3.   
  Guarantee Fund

Guarantee Fund

In accordance with the agreement between the EU and the EIB on the management of the Guarantee Fund, all interbank investments should have a minimum rating from Moody's or equivalent of P-1. As at 31 December 2010 all investments (EUR 124 million) were made with such counterparties (2009: EUR 153 million). As at 31 December 2010, the fund invested in five short-term financial instruments and all such investments (EUR 69 million) were made with counterparties having a minimum rating of P-1 Moody's or equivalent. All the securities held in the available for sale portfolio are in line with the management guidelines.

7.3.4.   
  ECSC in liquidation

ECSC in liquidation

Exposure to credit risk is managed through regular analysis of the ability of borrowers to meet interest and capital repayment obligations. Exposure to credit risk is also managed by obtaining collateral as well as country, corporate and personal guarantees. 68 % of the total amount of outstanding loans is covered by guarantees from a Member State or equivalent bodies (e.g. public institutions). 11 % of loans outstanding have been granted to banks or have been guaranteed by banks. As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. The operating unit is only allowed to enter into deals with eligible banks having sufficient counterparty limits.

7.4.   LIQUIDITY RISK

LIQUIDITY RISK

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

7.4.1.   
  Treasury operations

Treasury operations

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

7.4.2.   
  Borrowing and lending activities (MFA, BOP and Euratom)

Borrowing and lending activities (MFA, BOP and Euratom)

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms and conditions (back-to-back operations). For MFA and Euratom, the Guarantee Fund serves as a liquidity reserve (or safety net) in case of payment default and payment delays of borrowers. For BOP, the Council Regulation 431/2009 provides for a procedure allowing sufficient time to mobilise funds through the EU budget.

7.4.3.   
  Guarantee Fund

Guarantee Fund

The fund is managed according to the principle that the assets shall have a sufficient degree of liquidity and mobilisation in relation to the relevant commitments. The fund must maintain a minimum of EUR 100 million in a portfolio with a maturity of < 12 months which is to be invested in monetary instruments. As at 31 December 2010 these investments amounted to EUR 192 million. Furthermore a minimum of 20 % of the fund's nominal value shall comprise monetary instruments, fixed-rate bonds with a remaining maturity of no more than one year and floating-rate bonds. As at 31 December 2010 this ratio stood at 32 %.

7.4.4.   
  ECSC in liquidation

ECSC in liquidation

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms and conditions (back-to-back operations). For the asset and liability management of ECSC in liquidation, the Commission manages liquidity requirements based on disbursement forecasts obtained through consultations with the responsible Commission services.

8.   RELATED PARTY DISCLOSURES

8.1.   RELATED PARTIES

RELATED PARTIES

The related parties of the EU are its consolidated entities and the key management personnel of these entities (see below). Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules. A list of these consolidated entities is given in note 10.

10

8.2.   KEY MANAGEMENT ENTITLEMENTS

KEY MANAGEMENT ENTITLEMENTS

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

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

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

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

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

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

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

Official Journal of the European Union

Key management financial entitlements

Key management financial entitlements

| EUR |
| --- |
| Entitlement (per employee) | Category 1 | Category 2 | Category 3 | Category 4 | Category 5 |
| Basic salary (per month) | 25 351,76 | 22 963,55 – 23 882,09 | 18 370,84 – 20 667,20 | 19 840,51 – 21 126,47 | 11 681,17 – 18 370,84 |
| Residential/Expatriation allowance | 15 % | 15 % | 15 % | 15 % | 16 % |
| Family allowances: |
| Household (% salary) | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 |
| Dependent child | 372,61 | 372,61 | 372,61 | 372,61 | 372,61 |
| Pre-school | 91,02 | 91,02 | 91,02 | 91,02 | 91,02 |
| Education, or | 252,81 | 252,81 | 252,81 | 252,81 | 252,81 |
| Education outside place of work | 505,39 | 505,39 | 505,39 | 505,39 | 505,39 |
| Presiding judges allowance | N/A | N/A | 500 - 810,74 | N/A | N/A |
| Representation allowance | 1 418,07 | 0 - 911,38 | 500 - 607,71 | N/A | N/A |
| Annual travel costs | N/A | N/A | N/A | N/A | Yes |
| Transfers to Member State: |
| Education allowance (4) | Yes | Yes | Yes | Yes | Yes |
| % of salary (4) | 5 % | 5 % | 5 % | 5 % | 5 % |
| % of salary with no cc | max 25 % | max 25 % | max 25 % | max 25 % | max 25 % |
| Representation expenses | reimbursed | reimbursed | reimbursed | N/A | N/A |
| Taking up duty: |
| Installation expenses | 50 703,52 | 45 927,10 – 47 764,18 | 36 741,68 – 41 334,40 | 39 681,02 – 42 252,94 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Leaving office: |
| Resettlement expenses | 25 351,76 | 22 963,55 – 23 882,09 | 18 370,84 – 20 667,20 | 19 840,51 – 21 126,47 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Transition (% salary) (5) | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | N/A |
| Sickness insurance | covered | covered | covered | covered | optional |
| Pension (% salary, before tax) | Max 70 % | Max 70 % | Max 70 % | Max 70 % | Max 70 % |
| Deductions: |
| Community tax | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % |
| Sickness insurance (% salary) | 1,8 % | 1,8 % | 1,8 % | 1,8 % | 1,8 % |
| Special levy on salary | 5,07 % | 5,07 % | 5,07 % | 5,07 % | 5,07 % |
| Pension deduction | N/A | N/A | N/A | N/A | 11,3 % |
| Number of persons at 31/12/2010 | 3 | 7 | 91 | 27 | 89 |

EUR

Entitlement (per employee)

Category 1

Category 2

Category 3

Category 4

Category 5

Basic salary (per month)

Basic salary

25 351,76

22 963,55 – 23 882,09

18 370,84 – 20 667,20

19 840,51 – 21 126,47

11 681,17 – 18 370,84

Residential/Expatriation allowance

Residential/Expatriation allowance

15 %

15 %

15 %

15 %

16 %

Family allowances:

Family allowances:

Household (% salary)

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

Dependent child

372,61

372,61

372,61

372,61

372,61

Pre-school

91,02

91,02

91,02

91,02

91,02

Education, or

252,81

252,81

252,81

252,81

252,81

Education outside place of work

505,39

505,39

505,39

505,39

505,39

Presiding judges allowance

Presiding judges allowance

N/A

N/A

500 - 810,74

N/A

N/A

Representation allowance

Representation allowance

1 418,07

0 - 911,38

500 - 607,71

N/A

N/A

Annual travel costs

Annual travel costs

N/A

N/A

N/A

N/A

Yes

Transfers to Member State:

Transfers to Member State:

Education allowance (4)

4

Yes

Yes

Yes

Yes

Yes

% of salary (4)

4

5 %

5 %

5 %

5 %

5 %

% of salary with no cc

max 25 %

max 25 %

max 25 %

max 25 %

max 25 %

Representation expenses

Representation expenses

reimbursed

reimbursed

reimbursed

N/A

N/A

Taking up duty:

Taking up duty:

Installation expenses

50 703,52

45 927,10 – 47 764,18

36 741,68 – 41 334,40

39 681,02 – 42 252,94

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Leaving office:

Leaving office:

Resettlement expenses

25 351,76

22 963,55 – 23 882,09

18 370,84 – 20 667,20

19 840,51 – 21 126,47

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Transition (% salary) (5)

5

40 % - 65 %

40 % - 65 %

40 % - 65 %

40 % - 65 %

N/A

Sickness insurance

covered

covered

covered

covered

optional

Pension (% salary, before tax)

Pension

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Deductions:

Deductions:

Community tax

8 % - 45 %

8 % - 45 %

8 % - 45 %

8 % - 45 %

8 % - 45 %

Sickness insurance (% salary)

1,8 %

1,8 %

1,8 %

1,8 %

1,8 %

Special levy on salary

5,07 %

5,07 %

5,07 %

5,07 %

5,07 %

Pension deduction

N/A

N/A

N/A

N/A

11,3 %

Number of persons at 31/12/2010

Number of persons at 31/12/2010

3

3

7

7

91

91

27

27

89

89

9.   EVENTS AFTER THE BALANCE SHEET DATE

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

Balance of Payments (BOP) lending operations

Balance of Payments (BOP) lending operations

In March 2011 a further EUR 1,2 billion was disbursed to Romania under the BOP facility, with a maturity date of April 2018 and in June 2011 the last amount of EUR 150 million was paid out. Furthermore, in February 2011, Romania requested a follow-up precautionary financial assistance programme under the Balance of Payments Facility to support the re-launch of economic growth. On 12 May 2011 the Council decided to make available precautionary EU BOP assistance for Romania of up to EUR 1,4 billion (Council Decision 2011/288/EU). Currently, Romania does not intend to request the disbursement of any instalment under the precautionary financial assistance programme since the amounts would only be requested in case of unforeseen market deterioration in the economic and/or financial situation due to factors outside the control of the Romanian authorities, leading to the opening of an acute financing gap. Should the financial assistance be activated, it would be provided in form of a loan with a maximum maturity of seven years. The table below shows the reimbursement schedule of the EUR 13,4 billion disbursed at the date of authorisation for issue of the annual accounts.

European Financial Stabilisation Mechanism (EFSM)

European Financial Stabilisation Mechanism (EFSM)

On 11 May 2010 the Council adopted a European Financial Stabilisation Mechanism (EFSM) to preserve financial stability in Europe (Council Regulation (EU) no 407/2010). The mechanism is based on Art. 122.2 of the Treaty and enables the granting of financial assistance to a Member State in difficulties or seriously threatened with severe difficulties caused by exceptional occurrences beyond its control. The assistance may take the form of a loan or credit line guaranteed by the EU budget. When activated, the Commission would borrow funds on the capital markets or with financial institutions on behalf of the EU and lend these funds to the beneficiary Member State. The ECOFIN Council conclusions of 9 May 2010 restrict the facility to EUR 60 billion but the legal limit is provided in Article 2.2 of the Council Regulation, which restricts the outstanding amount of loans or credit lines to the margin available under the own resources ceiling.

o

On 21 November 2010, Ireland requested financial assistance under the above referenced Regulation. The Council Implementing Decision (2011/77/EU) of 7 December 2010 agreed to grant Ireland a loan amounting to a maximum of EUR 22,5 billion with a maximum average maturity of 71⁄2 years. The loan will be made available in a maximum of 13 instalments. The first tranche of EUR 5 billion under the first instalment was paid to Ireland on 12 January 2011 with a final maturity in December 2015. The second tranche of the first instalment of EUR 3,4 billion was paid to Ireland on 24 March 2011 with a final maturity in April 2018. A second instalment of EUR 3 billion, with a maturity date of June 2021, was paid out on the 31 May 2011.

On 7 April 2011, Portugal also requested financial assistance under the EFSM and so on 17 May 2011 the Council agreed to grant a loan amounting to a maximum of EUR 26 billion (see Council Implementing Decision (2011/344/EU)), with a maximum average maturity of 71⁄2 years. The loan shall be made available during three years, in a maximum of 14 installments. The first tranche of the first installment, amounting to EUR 1,75 billion, was disbursed on 31 May 2011, with a maturity date of June 2021. On 1 June 2011, the second tranche of the first installment, EUR 4,75 billion was disbursed, with a maturity of June 2016. The table below shows the reimbursement schedule of the EUR 17,9 billion disbursed at the date of authorisation for issue of the annual accounts.

Other Financial Stabilisation Mechanisms without impact on the EU accounts

Other Financial Stabilisation Mechanisms without impact on the EU accounts

It is worth noting that although it has no impact on either the EU accounts or the EU budget, another financial assistance package, the European Financial Stability Facility (EFSF), was established by the euro area Member States and other participating Member States. This Facility expires in June 2013.

The above mentioned EFSM loans to Ireland and Portugal were granted in conjunction with a loan facility from the EFSF with an aggregate net disbursement amount of EUR 17,7 billion for Ireland and EUR 26 billion for Portugal, and with assistance from the International Monetary Fund of respectively SDR 19,5 billion (approximately EUR 22.5 billion based on the rate in force at the time of the agreement) and SDR 23,7 billion (approximately EUR 26 billion) under an Extended Fund Facility. In addition, Ireland was also granted bilateral loans from the United Kingdom of GBP 3,3 billion (approximately EUR 3,8 billion), Sweden EUR 600 million and Denmark EUR 400 million.

Additionally, the European Council decided on the 24 June 2011 to establish a new permanent crisis mechanism, the European Stability Mechanism (ESM). It will become operational as of mid-2013 and will replace the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). This mechanism will allow for the provision of financial assistance to euro area Member States in financial distress. Assistance will be conditional on the implementation of a strict economic and fiscal adjustment programme, in line with existing arrangements. As this mechanism will have its own legal personality and will be funded directly by the euro area Member States, there is no impact on either the EU accounts or the EU budget.

Outstanding loan amounts to be reimbursed per year as at date of authorisation for issue of the annual accounts

Outstanding loan amounts to be reimbursed per year as at date of authorisation for issue of the annual accounts

| EUR Billions |
| --- |
| Loan and Beneficiary | Instalment | 2011 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2021 | 2025 | Total |
| BOP |
| Hungary | 1st | 2,0 | | | | | | | | | |
| 2nd | | 2,0 | | | | | | | | |
| 3rd | | | | 1,5 | | | | | | |
| Latvia | 1st | | 1,0 | | | | | | | | |
| 2nd | | | 1,2 | | | | | | | |
| 3rd | | | | | | | 0,5 | | | |
| 4th | | | | | | | | | 0,2 | |
| 5th | | | | | | | | | | |
| 6th | | | | | | | | | | |
| Romania | 1st | | | 1,5 | | | | | | | |
| 2nd | | | | | | | 1,0 | | | |
| 3rd | | | | | 1,15 | | | | | |
| 4th | | | | | | 1,2 | | | | |
| 5th | | | | | | 0,15 | | | | |
| Precautionary assistance | | | | | | | | | | |
| Total BOP | | 2,0 | 3,0 | 2,7 | 1,5 | 1,15 | 1,35 | 1,5 | 0,0 | 0,2 | 13,4 |
| EFSM |
| Ireland | 1st (T1) | | | 5,0 | | | | | | | |
| 1st (T2) | | | | | | 3,4 | | | | |
| 2nd | | | | | | | | 3,0 | | |
| Portugal | 1st (T1) | | | | | | | | 1,75 | | |
| 1st (T2) | | | | 4,75 | | | | | | |
| Total EFSM | | 0,0 | 0,0 | 5,0 | 4,75 | 0,0 | 3,4 | 0,0 | 4,75 | 0,0 | 17,9 |
| Overall total | | 2,0 | 3,0 | 7,7 | 6,25 | 1,15 | 4,75 | 1,5 | 4,75 | 0,2 | 31,3 |

EUR Billions

Loan and Beneficiary

Instalment

2011

2014

2015

2016

2017

2018

2019

2021

2025

Total

BOP

BOP

Hungary

1st

2,0

2nd

2,0

3rd

1,5

Latvia

1st

1,0

2nd

1,2

3rd

0,5

4th

0,2

5th

6th

Romania

1st

1,5

2nd

1,0

3rd

1,15

4th

1,2

5th

0,15

Precautionary assistance

Total BOP

2,0

3,0

2,7

1,5

1,15

1,35

1,5

0,0

0,2

13,4

EFSM

EFSM

Ireland

1st (T1)

5,0

1st (T2)

3,4

2nd

3,0

Portugal

1st (T1)

1,75

1st (T2)

4,75

Total EFSM

0,0

0,0

5,0

4,75

0,0

3,4

0,0

4,75

0,0

17,9

Overall total

2,0

3,0

7,7

6,25

1,15

4,75

1,5

4,75

0,2

31,3

10.   CONSOLIDATED ENTITIES

A.   CONTROLLED ENTITIES

CONTROLLED ENTITIES

1.   
  Institutions and consultative bodies

Institutions and consultative bodies

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

Committee of the Regions

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

Council of the European Union

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

Court of Justice of the European Union

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

European Commission

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

European Court of Auditors

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

European Data Protection Supervisor

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

European Economic and Social Committee

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

European Ombudsman

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

European Parliament

| | European Council (6) |
| --- | --- |

European Council (6)

6

2.   
  EU Agencies

EU Agencies

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

European Agency for Safety and Health at Work

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

European Aviation Safety Agency

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

European Centre for Disease Prevention and Control

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

European Centre for the Development of Vocational Training

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

European Environment Agency

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

European Food Safety Authority

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

European Foundation for the Improvement of Living and Working Conditions

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

European Maritime Safety Agency

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

European Medicines Agency

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

European Chemicals Agency

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

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

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

Eurojust

| | European Institute for Gender Equality (6) |
| --- | --- |

European Institute for Gender Equality (6)

6

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

European Union Agency for Fundamental Rights

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

European Network and Information Security Agency

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

European Training Foundation

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

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

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

Translation Centre for the Bodies of the European Union

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

European GNSS Supervisory Authority

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

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

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

European Railway Agency

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

Community Plant Variety Office

| | Community Fisheries Control Agency |
| --- | --- |

Community Fisheries Control Agency

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

European Monitoring Centre for Drugs and Drug Addiction

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

European Police College (CEPOL)

| | European Police Office (EUROPOL) (6) |
| --- | --- |

European Police Office (EUROPOL) (6)

6

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

Executive Agency for Competitiveness and Innovation

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

Education, Audiovisual & Culture Executive Agency

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

European Research Council Executive Agency

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

Executive Agency for Health and Consumers

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

Trans-European Transport Network Executive Agency

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

Research Executive Agency

3.   
  Other controlled entities

Other controlled entities

European Coal and Steel Community (in liquidation)

B.   JOINT VENTURES

JOINT VENTURES

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

ITER International Fusion Energy Organisation

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

SESAR Joint Undertaking

| | FCH Joint Undertaking (6) |
| --- | --- |

FCH Joint Undertaking (6)

6

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

Galileo Joint Undertaking in liquidation

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

IMI Joint Undertaking

C.   ASSOCIATES

ASSOCIATES

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

European Investment Fund

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

Clean Sky Joint Undertaking

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

ARTEMIS Joint Undertaking

| | ENIAC Joint Undertaking (6) |
| --- | --- |

ENIAC Joint Undertaking (6)

6

11.   NON-CONSOLIDATED ENTITIES

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

11.1.   THE EUROPEAN DEVELOPMENT FUND (EDF)

THE EUROPEAN DEVELOPMENT FUND (EDF)

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

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

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

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

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

| EUR millions |
| --- |
| | 31.12.2010 | 31.12.2009 |
| NON-CURRENT ASSETS | 353 | 196 |
| CURRENT ASSETS | 2 151 | 1 389 |
| Total assets | 2 504 | 1 585 |
| CURRENT LIABILITIES | (1 046) | (860) |
| Total liabilities | (1 046) | (860) |
| Net assets | 1 458 | 725 |
| FUNDS & RESERVES |
| Called fund capital | 23 879 | 20 381 |
| Other reserves | 2 252 | 2 252 |
| Economic outturn carried forward from previous years | (21 908) | (18 814) |
| Economic outturn of the year | (2 765) | (3 094) |
| Net assets | 1 458 | 725 |

EUR millions

31.12.2010

31.12.2009

NON-CURRENT ASSETS

353

196

CURRENT ASSETS

2 151

1 389

Total assets

2 504

1 585

CURRENT LIABILITIES

(1 046)

(860)

Total liabilities

(1 046)

(860)

Net assets

Net assets

1 458

1 458

725

725

FUNDS & RESERVES

Called fund capital

23 879

20 381

Other reserves

2 252

2 252

Economic outturn carried forward from previous years

(21 908)

(18 814)

Economic outturn of the year

(2 765)

(3 094)

Net assets

Net assets

1 458

1 458

725

725

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

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

| EUR millions |
| --- |
| | 2010 | 2009 |
| OPERATING REVENUE | 140 | 49 |
| OPERATING EXPENSES | (3 000) | (3 192) |
| DEFICIT FROM OPERATING ACTIVITIES | (2 860) | (3 143) |
| FINANCIAL ACTIVITIES | 95 | 49 |
| ECONOMIC OUTTURN OF THE YEAR | (2 765) | (3 094) |

EUR millions

2010

2009

OPERATING REVENUE

140

49

OPERATING EXPENSES

(3 000)

(3 192)

DEFICIT FROM OPERATING ACTIVITIES

(2 860)

(3 143)

FINANCIAL ACTIVITIES

95

49

ECONOMIC OUTTURN OF THE YEAR

ECONOMIC OUTTURN OF THE YEAR

(2 765)

(2 765)

(3 094)

(3 094)

11.2.   THE SICKNESS INSURANCE SCHEME

THE SICKNESS INSURANCE SCHEME

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

The scheme has four separate entities – the main scheme covering staff of the Institutions, Agencies of the European Union, and three smaller schemes covering staff in the European University of Florence, the European schools and staff working outside the EU such as staff in the EU delegations. The total assets of the Scheme at 31 December 2010 totalled EUR 286 million (2009: EUR 297 million).

11.3.   THE PARTICIPANTS GUARANTEE FUND (PGF)

THE PARTICIPANTS GUARANTEE FUND (PGF)

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF). This is a mutual benefit instrument set up to cover the financial risks incurred by the EU and the participants during the implementation of the indirect actions of FP7, its capital and interests constituting a performance security. All participants of indirect actions taking the form of a grant contribute 5 % of the total EU contribution to the PGF's capital for the duration of the action. As such the participants are the owners of the PGF, and the EU (represented by the Commission) acts only as their executive agent. As at 31 December 2010 the PGF had total assets of EUR 879 million (2009: EUR 580 million). The funds of the PGF are its own property and are not controlled by the European Union, even if its financial assets are managed by the Commission.

PART II

Consolidated reports on implementation of the budget of the European Union and explanatory notes

Consolidated reports on implementation of the budget of the European Union and explanatory notes

CONTENTS

Reports on implementation of the budget:

Reports on implementation of the budget:

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

1.

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

2.

Revenue:

Revenue:

| 3. | Consolidated summary of the implementation of budget revenue |
| --- | --- |

3.

Expenditure:

Expenditure:

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

4.

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

5.

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

6.

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

7.

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

8.

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

9.

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

10.

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

11.

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

12.

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

13.

Institutions:

Institutions:

| 14. | Consolidated summary of implementation of budget revenue by Institution |
| --- | --- |

14.

| 15. | Implementation of commitment appropriations by financial framework heading |
| --- | --- |

15.

Agencies:

Agencies:

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

16.

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

17.

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

18.

Explanatory notes to the reports on implementation of the budget:

Explanatory notes to the reports on implementation of the budget:

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

1.

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

2.

CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET
   (7)

CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET

7

RESULT OF IMPLEMENTATION OF THE EU BUDGET

RESULT OF IMPLEMENTATION OF THE EU BUDGET

1.   EU budget outturn 2010

EU budget outturn 2010

| EUR millions |
| --- |
| EUROPEAN UNION | 2010 | 2009 |
| Revenue for the financial year | 127 795 | 117 626 |
| Payments against current year appropriations | (121 213) | (116 579) |
| Payment appropriations carried over to year N+1 | (2 797) | (1 759) |
| Cancellation of unused payment appropriations carried over from year N-1 | 741 | 2 791 |
| Exchange differences for the year | 23 | 185 |
| Budget Outturn
   (8) | 4 549 | 2 264 |

EUR millions

EUROPEAN UNION

2010

2009

Revenue for the financial year

127 795

127 795

117 626

117 626

Payments against current year appropriations

(121 213)

(121 213)

(116 579)

(116 579)

Payment appropriations carried over to year N+1

(2 797)

(2 797)

(1 759)

(1 759)

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

741

741

2 791

2 791

Exchange differences for the year

23

23

185

185

Budget Outturn
   (8)

Budget Outturn

8

4 549

4 549

2 264

2 264

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

2.   Statement of comparison of budget and actual amounts

Statement of comparison of budget and actual amounts

Revenue

Revenue

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

EUR millions

Title

Original Budget

Final Budget

Entitlements established

Revenue

Difference Final-Actual

Receipts as % of budget

Outstanding

1

2

3

4

5=2 – 4

6=4/2

7=3 – 4

1.

Own resources

121 507

119 270

119 950

119 869

– 599

100,50 %

81

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

3.

Surpluses, balances and adjustments

0

2 254

1 624

1 460

794

64,79 %

164

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

4.

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

1 178

1 180

1 129

1 123

58

95,12 %

7

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

5.

Revenue accruing from the administrative operation of the institutions

69

69

407

388

– 319

563,54 %

19

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

6.

Contributions and refunds in connection with community agreements and programmes

30

30

3 781

3 512

–3 482

11 707,30 %

269

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

7.

Interest on late payments and fines

123

123

15 301

1 408

–1 285

1 144,36 %

13 893

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

8.

Borrowing and lending operations

0

0

122

0

0

0

122

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

9.

Miscellaneous revenue

30

30

47

36

–6

119,95 %

10

Total

122 937

122 956

142 362

127 795

–4 839

103,94 %

14 566

Expenditure – by financial framework heading

Expenditure – by financial framework heading

| EUR millions |
| --- |
| Financial Framework Heading | Original Budget | Final Budget (9) | Payments made | Difference Final-Actual | % | Appropriations carried over | Appropriations lapsing |
| 1 | 2 | 3 | 4=2 – 3 | 5=3/2 | 6 | 7=2 – 3 – 6 |
| 1. | Sustainable growth |

EUR millions

Financial Framework Heading

Original Budget

Final Budget (9)

9

Payments made

Difference Final-Actual

%

Appropriations carried over

Appropriations lapsing

1

2

3

4=2 – 3

5=3/2

6

7=2 – 3 – 6

1.

Sustainable growth

47 727

52 103

48 828

3 275

93,71 %

1 905

1 370

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

2.

Preservation & management of natural resources

58 136

59 630

56 647

2 983

95,00 %

2 382

601

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

3.

Citizenship, freedom, security and justice

1 398

1 617

1 373

244

84,93 %

199

44

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

4.

The EU as a global partner

7 788

8 101

7 487

615

92,41 %

114

501

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

5.

Administration

7 889

9 076

7 896

1 180

87,00 %

957

223

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

6.

Compensations

0

0

0

0

0,00 %

0

0

Total

122 937

130 527

122 231

8 296

93,64 %

5 557

2 739

Expenditure – by policy area

Expenditure – by policy area

| EUR millions |
| --- |
| Policy Area | Original Budget | Final Budget (10) | Payments made | Difference Final-Actual | % | Appropriations carried over to 2011 | Appropriations lapsing |
| 1 | 2 | 3 | 4=2 – 3 | 5=3/2 | 6 | 7=2 – 3 – 6 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Original Budget

Final Budget (10)

10

Payments made

Difference Final-Actual

%

Appropriations carried over to 2011

Appropriations lapsing

1

2

3

4=2 – 3

5=3/2

6

7=2 – 3 – 6

01

Economic and financial affairs

406

401

289

112

72,11 %

67

44

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

02

Enterprise

638

771

658

113

85,35 %

99

14

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

03

Competition

91

104

92

12

88,79 %

10

2

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

04

Employment and social affairs

8 572

8 543

7 481

1 062

87,57 %

43

1 019

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

05

Agriculture and rural development

57 077

58 421

55 611

2 810

95,19 %

2 325

485

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

3 262

3 369

2 859

510

84,85 %

187

323

| 07 | Environment |
| --- | --- |

07

Environment

371

438

358

80

81,79 %

24

56

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

08

Research

4 138

5 369

4 507

863

83,93 %

848

14

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

09

Information society and media

1 597

1 986

1 786

200

89,94 %

197

3

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

10

Direct research

392

789

438

351

55,51 %

344

7

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

11

Maritime affairs and Fisheries

819

827

656

172

79,23 %

39

133

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

12

Internal market

73

80

71

9

88,66 %

7

2

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

13

Regional policy

28 768

30 709

30 623

87

99,72 %

79

8

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

14

Taxation and customs union

107

136

126

10

92,53 %

9

1

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

15

Education and culture

1 443

1 783

1 572

211

88,16 %

205

6

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

16

Communication

210

231

206

25

89,24 %

14

11

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

17

Health and consumer protection

542

664

590

74

88,84 %

45

30

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

18

Area of freedom, security and justice

798

840

745

95

88,70 %

71

24

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

19

External relations

3 658

3 867

3 683

185

95,23 %

84

101

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

20

Trade

82

90

77

13

85,06 %

6

7

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

21

Development and relations with ACP States

1 608

1 819

1 708

111

93,90 %

55

56

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

22

Enlargement

1 204

1 152

1 130

22

98,06 %

16

6

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

23

Humanitarian aid

820

978

971

7

99,30 %

6

1

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

24

Fight against fraud

73

82

73

10

88,34 %

7

3

| 25 | Commission’s policy coordination and legal advice |
| --- | --- |

25

Commission’s policy coordination and legal advice

188

215

189

26

87,95 %

22

4

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

26

Commission’s administration

1 013

1 239

1 044

195

84,24 %

177

19

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

27

Budget

68

77

65

12

83,82 %

11

1

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

28

Audit

11

12

11

2

86,62 %

1

0

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

29

Statistics

120

148

126

22

84,99 %

17

6

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

30

Pensions and related expenditure

1 214

1 210

1 205

4

99,63 %

0

4

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

31

Language Services

389

486

427

60

87,75 %

57

3

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

40

Reserves

249

193

0

193

0,00 %

0

193

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

90

Other Institutions

2 937

3 496

2 857

639

81,72 %

484

155

Total

122 937

130 527

122 231

8 296

93,64 %

5 557

2 739

3.   Summary of the implementation of budget revenue 2010

Summary of the implementation of budget revenue 2010

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

EUR millions

Title

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements of Current year

On entitlements Carried

Total

1.

Own resources

121 507

119 270

119 861

89

119 950

119 846

22

119 869

100,50 %

81

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

3.

Surpluses, balances and adjustments

0

2 254

1 624

0

1 624

1 460

0

1 460

64,79 %

164

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

4.

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

1 178

1 180

1 122

7

1 129

1 116

7

1 123

95,12 %

7

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

5.

Revenue from administrative operations of institutions

69

69

305

102

407

290

98

388

563,54 %

19

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

6.

Contributions and refunds in connection with community agreements and programmes

30

30

3 507

275

3 781

3 360

153

3 512

11 707,30 %

269

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

7.

Interest on late payments and fines

123

123

3 460

11 841

15 301

621

786

1 408

1 144,36 %

13 893

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

8.

Borrowing and lending operations

0

0

47

76

122

0

0

0

122

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

9.

Miscellaneous revenue

30

30

28

19

47

24

13

36

119,95 %

10

Total

122 937

122 956

129 955

12 407

142 362

126 717

1 078

127 795

103,94 %

14 566

Detail Title 1:   Own resources

Detail Title 1:

Own resources

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

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements of Current year

On entitlements Carried

Total

11.

Sugar levies

123

123

146

0

146

146

0

146

118,00 %

0

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

12.

Customs duties

14 080

15 596

15 507

89

15 595

15 491

22

15 514

99,47 %

81

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

13.

VAT

13 951

13 277

13 393

0

13 393

13 393

0

13 393

100,87 %

0

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

14.

GNI

93 353

90 273

90 948

0

90 948

90 948

0

90 948

100,75 %

0

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

15.

Correction of budgetary imbalances

0

0

– 128

0

– 128

– 128

0

– 128

—

0

| 16. | Reduction of GNI based contributions of NL & S |
| --- | --- |

16.

Reduction of GNI based contributions of NL & S

0

0

–3

0

–3

–3

0

–3

—

0

Total

121 507

119 270

119 861

89

119 950

119 846

22

119 869

100,50%

81

Detail Title 3:   Surpluses, balances and adjustments

Detail Title 3:

Surpluses, balances and adjustments

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

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements of Current year

On entitlements Carried

Total

30.

Surplus from previous year

0

2 254

2 254

0

2 254

2 254

0

2 254

100,00 %

0

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

31.

VAT balances

0

0

– 880

0

– 880

– 917

0

– 917

—

37

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

32.

GNI balances

0

0

241

0

241

113

0

113

—

128

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

34.

Adjustment for non-participation in JHAP

0

0

–4

0

–4

–4

0

–4

—

0

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

35.

United Kingdom correction-adjustments

0

0

9

0

9

9

0

9

—

0

| 37. | United Kingdom correction-intermediate calculation |
| --- | --- |

37.

United Kingdom correction-intermediate calculation

0

0

4

0

4

4

0

4

—

0

Total

0

2 254

1 624

0

1 624

1 460

0

1 460

64,79 %

164

4.   Breakdown & changes in commitment & payment appropriations by financial framework heading

Breakdown & changes in commitment & payment appropriations by financial framework heading

| EUR millions |
| --- |
| | Commitment appropriations | Payment appropriations |
| Financial Framework Heading | Appropriations adopted | Modifications
  (Transfers and AB) | Carried over | Assigned revenue | Total additional | Total authorised | Appropriations adopted | Modifications
  (Transfers and AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | 5=3 + 4 | 6=1 + 2 + 5 | 7 | 8 | 9 | 10 | 11=9 + 10 | 12=7 + 8 + 11 |
| 1 | Sustainable growth |

EUR millions

Commitment appropriations

Payment appropriations

Financial Framework Heading

Appropriations adopted

Modifications

(Transfers and AB)

Carried over

Assigned revenue

Total additional

Total authorised

Appropriations adopted

Modifications

(Transfers and AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

5=3 + 4

6=1 + 2 + 5

7

8

9

10

11=9 + 10

12=7 + 8 + 11

1

Sustainable growth

64 249

0

65

1 929

1 994

66 243

47 727

1 074

932

2 370

3 302

52 103

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

59 499

0

253

2 560

2 813

62 312

58 136

–1 116

62

2 549

2 611

59 630

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

3

Citizenship, freedom, security and justice

1 674

80

0

151

151

1 906

1 398

42

8

169

177

1 617

| 4 | The EU as a global partner |
| --- | --- |

4

The EU as a global partner

8 141

0

0

277

277

8 418

7 788

1

90

222

313

8 101

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

5

Administration

7 889

19

11

473

484

8 392

7 889

19

682

486

1 168

9 076

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

6

Compensations

0

0

0

0

0

0

0

0

0

0

0

0

Total

141 453

99

329

5 390

5 719

147 270

122 937

19

1 774

5 797

7 571

130 527

5.   Implementation of commitment appropriations by financial framework heading

Implementation of commitment appropriations by financial framework heading

| EUR millions |
| --- |
| Financial Framework Heading | Commitment appropriations authorised | Commitments made | Appropriations carried over to 2011 | Appropriations lapsing |
| From the year’s appropriations | From carry-overs | From assigned revenue | Total | % | Assigned revenue | Carry-overs by decision | Total | % | From the year’s budget appropriations | From carry overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9=7 + 8 | 10=9/1 | 11 | 12 | 13 | 14=11 + 12 + 13 | 15=14/1 |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Commitment appropriations authorised

Commitments made

Appropriations carried over to 2011

Appropriations lapsing

From the year’s appropriations

From carry-overs

From assigned revenue

Total

%

Assigned revenue

Carry-overs by decision

Total

%

From the year’s budget appropriations

From carry overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9=7 + 8

10=9/1

11

12

13

14=11 + 12 + 13

15=14/1

1

Sustainable growth

66 243

63 590

65

799

64 453

97,30 %

1 130

182

1 312

1,98 %

477

0

1

478

0,72 %

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

62 312

59 406

253

592

60 251

96,69 %

1 968

2

1 970

3,16 %

91

0

0

91

0,15 %

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

3

Citizenship, freedom, security and justice

1 906

1 717

0

78

1 795

94,20 %

73

24

97

5,11 %

13

0

0

13

0,69 %

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

4

The EU as a global player

8 418

8 083

0

164

8 247

97,97 %

113

42

154

1,83 %

16

0

0

17

0,20 %

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

5

Administration

8 392

7 758

10

229

7 997

95,30 %

244

9

254

3,02 %

140

1

0

141

1,68 %

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

6

Compensations

0

0

0

0

0

0,00 %

0

0

0

0,00 %

0

0

0

0

0,00 %

Total

147 270

140 554

328

1 861

142 744

96,93 %

3 528

259

3 787

2,57 %

738

1

1

740

0,50 %

6.   Implementation of payment appropriations by financial framework heading

Implementation of payment appropriations by financial framework heading

| EUR millions |
| --- |
| Financial Framework Heading | Payment
  Appropriations authorised | Payments made | Appropriations carried over to 2010 | Appropriations lapsing |
| From the year’s appropriations | From carry-overs | From assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | Assigned revenue | Total | % | From the year’s appropria-tions | From carry-overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9 | 10=7 + 8 + 9 | 11=10/1 | 12 | 13 | 14 | 15=12 + 13 + 14 | 16=15/1 |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Payment

Appropriations authorised

Payments made

Appropriations carried over to 2010

Appropriations lapsing

From the year’s appropriations

From carry-overs

From assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

Assigned revenue

Total

%

From the year’s appropria-tions

From carry-overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9

10=7 + 8 + 9

11=10/1

12

13

14

15=12 + 13 + 14

16=15/1

1

Sustainable growth

52 103

47 811

282

735

48 828

93,71 %

125

156

1 624

1 905

3,66 %

709

651

10

1 370

2,63 %

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

59 630

56 014

47

587

56 647

95,00 %

46

373

1 963

2 382

3,99 %

586

15

0

601

1,01 %

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

3

Citizenship, freedom, security and justice

1 617

1 299

6

67

1 373

84,93 %

8

90

101

199

12,33 %

42

2

0

44

2,74 %

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

4

The EU as a global player

8 101

7 259

81

147

7 487

92,41 %

36

2

76

114

1,41 %

491

9

0

501

6,18 %

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

5

Administration

9 076

7 088

602

205

7 896

87,00 %

666

10

281

957

10,54 %

144

80

0

223

2,46 %

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

6

Compensations

0

0

0

0

0

0,00 %

0

0

0

0

0,00 %

0

0

0

0

0,00%

Total

130 527

119 472

1 018

1 741

122 231

93,64 %

881

631

4 045

5 557

4,26 %

1 972

756

11

2 739

2,10 %

7.   Movements in commitments outstanding - by financial framework heading

Movements in commitments outstanding - by financial framework heading

| EUR millions |
| --- |
| | Commitments outstanding at the end of the previous year | Commitments of the year | |
| Financial Framework Heading | Commitments carried forward from previous year | Decommitments /Revaluations/ Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation of commitments which cannot be carried over | Commitments outstanding at year-end | Total Commitments outstanding at year-end |
| 1 | Sustainable growth |

EUR millions

Commitments outstanding at the end of the previous year

Commitments of the year

Financial Framework Heading

Commitments carried forward from previous year

Decommitments /Revaluations/ Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation of commitments which cannot be carried over

Commitments outstanding at year-end

Total Commitments outstanding at year-end

1

Sustainable growth

136 903

–2 058

–43 678

91 167

64 453

–5 150

–3

59 300

150 467

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

19 541

– 181

–10 280

9 079

60 251

–46 367

0

13 883

22 963

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

3

Citizenship, freedom, security and justice

1 662

– 173

– 452

1 037

1 795

– 921

0

874

1 911

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

4

The EU as a global player

18 462

– 890

–5 231

12 340

8 247

–2 255

0

5 992

18 332

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

5

Administration

704

–83

– 607

15

7 997

–7 289

–1

708

723

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

6

Compensations

0

0

0

0

0

0

0

0

0

Total

177 272

–3 385

–60 249

113 638

142 744

–61 982

–5

80 757

194 395

8.   Breakdown of commitments outstanding by the commitment's year of origin - by financial framework heading

Breakdown of commitments outstanding by the commitment's year of origin - by financial framework heading

| EUR millions |
| --- |
| Financial Framework Heading | < 2004 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Total |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

< 2004

2004

2005

2006

2007

2008

2009

2010

Total

1

Sustainable growth

781

617

1 461

13 421

2 879

23 288

48 719

59 300

150 467

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

2

Preservation & management of natural resources

44

13

47

1 517

138

688

6 633

13 883

22 963

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

3

Citizenship, freedom, security and justice

13

12

23

42

151

218

577

874

1 911

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

4

The EU as a global player

786

412

584

1 474

1 727

3 164

4 193

5 992

18 332

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

5

Administration

0

0

0

0

0

0

14

708

723

Total

1 623

1 055

2 116

16 455

4 895

27 359

60 136

80 757

194 395

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

Breakdown and changes in commitment and payment appropriations by policy area

| EUR millions |
| --- |
| Policy Area | Commitment appropriations | Payment appropriations |
| Approps adopted | Modifications
  (Transfer/AB) | Carried over | Assigned revenue | Total additional | Total authorised | Approps adopted | Modifications
  (Transfer/AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | 5=3 + 4 | 6=1 + 2 + 5 | 7 | 8 | 9 | 10 | 11=9 + 10 | 12=7 + 8 + 11 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations

Payment appropriations

Approps adopted

Modifications

(Transfer/AB)

Carried over

Assigned revenue

Total additional

Total authorised

Approps adopted

Modifications

(Transfer/AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

5=3 + 4

6=1 + 2 + 5

7

8

9

10

11=9 + 10

12=7 + 8 + 11

01

Economic and financial affairs

449

–6

0

13

13

455

406

–29

6

18

24

401

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

02

Enterprise

795

0

0

112

112

907

638

–7

13

126

140

771

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

03

Competition

91

0

0

4

4

95

91

0

8

4

12

104

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

04

Employment and social affairs

11 274

85

40

16

56

11 414

8 572

– 790

748

14

762

8 543

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

05

Agriculture and rural development

58 081

–2

252

2 548

2 800

60 879

57 077

–1 229

26

2 548

2 573

58 421

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

4 950

3

0

136

136

5 089

3 262

– 152

92

167

259

3 369

| 07 | Environment |
| --- | --- |

07

Environment

471

–1

0

24

24

494

371

26

24

18

42

438

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

08

Research

5 142

0

0

770

770

5 912

4 138

28

38

1 165

1 203

5 369

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

09

Information society and media

1 628

0

0

189

189

1 817

1 597

96

14

279

293

1 986

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

10

Direct research

383

0

4

460

464

847

392

–11

35

374

409

789

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

11

Maritime affairs and Fisheries

1 001

1

1

3

3

1 005

819

–9

15

3

17

827

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

12

Internal market

74

1

0

3

3

78

73

–2

6

3

9

80

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

13

Regional policy

38 897

99

21

4

25

39 020

28 768

1 925

13

4

17

30 709

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

14

Taxation and customs union

135

0

0

4

4

139

107

18

7

4

11

136

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

15

Education and culture

1 500

0

0

317

317

1 817

1 443

–3

14

329

343

1 783

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

16

Communication

218

2

0

4

4

223

210

3

15

4

18

231

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

17

Health and consumer protection

677

1

0

26

26

703

542

73

28

21

50

664

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

18

Area of freedom, security and justice

1 066

1

0

61

61

1 128

798

–23

7

58

65

840

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

19

External relations

4 264

65

0

121

121

4 450

3 658

67

50

92

142

3 867

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

20

Trade

79

–1

0

3

3

81

82

–1

6

3

9

90

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

21

Development and relations with ACP States

1 647

–49

0

139

139

1 737

1 608

57

41

114

154

1 819

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

22

Enlargement

1 022

–6

1

18

19

1 035

1 204

–79

9

19

28

1 152

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

23

Humanitarian aid

820

245

0

5

5

1 070

820

107

46

4

50

978

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

24

Fight against fraud

78

0

0

0

0

78

73

2

7

0

7

82

| 25 | Commission’s policy coordination and legal advice |
| --- | --- |

25

Commission’s policy coordination and legal advice

188

2

0

9

9

199

188

2

16

9

25

215

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

26

Commission’s administration

1 014

2

0

96

96

1 111

1 013

4

123

99

222

1 239

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

27

Budget

68

–7

0

6

6

67

68

–7

10

6

16

77

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

28

Audit

11

0

0

1

1

12

11

0

1

1

1

12

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

29

Statistics

141

–5

0

17

17

153

120

4

7

17

24

148

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

30

Pensions and related expenditure

1 214

–4

0

0

0

1 210

1 214

–4

0

0

0

1 210

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

31

Language Services

389

0

0

72

72

462

389

0

24

72

97

486

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

40

Reserves

749

– 334

0

0

0

415

249

–56

0

0

0

193

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

90

Other Institutions

2 937

9

10

213

223

3 170

2 937

9

325

224

549

3 496

Total

141 453

99

329

5 390

5 719

147 270

122 937

19

1 774

5 797

7 571

130 527

10.   Implementation of commitment appropriations by policy area

Implementation of commitment appropriations by policy area

| EUR millions |
| --- |
| Policy Area | Commitment appropriations authorised | Commitments made | Appropriations carried over to 2011 | Appropriations lapsing |
| From the year’s approps | From carry-overs | Assigned revenue | Total | % | Assigned revenue | Carry-overs: decision | Total | % | From the year’s budget approps | From carry-overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9=7 + 8 | 10=9/1 | 11 | 12 | 13 | 14=11 + 12 + 13 | 15=14/1 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations authorised

Commitments made

Appropriations carried over to 2011

Appropriations lapsing

From the year’s approps

From carry-overs

Assigned revenue

Total

%

Assigned revenue

Carry-overs: decision

Total

%

From the year’s budget approps

From carry-overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9=7 + 8

10=9/1

11

12

13

14=11 + 12 + 13

15=14/1

01

Economic and financial affairs

455

440

0

11

451

99,07 %

1

0

1

0,32 %

3

0

0

3

0,60 %

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

02

Enterprise

907

785

0

60

845

93,14 %

52

0

52

5,68 %

10

0

0

11

1,18 %

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

03

Competition

95

90

0

2

92

96,87 %

2

0

2

2,15 %

1

0

0

1

0,98 %

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

04

Employment and social affairs

11 414

11 329

40

9

11 378

99,69 %

7

19

26

0,23 %

10

0

0

10

0,09 %

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

05

Agriculture and rural development

60 879

58 048

252

580

58 880

96,72 %

1 967

0

1 967

3,23 %

31

0

0

31

0,05 %

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

5 089

4 797

0

67

4 864

95,57 %

69

146

215

4,23 %

10

0

0

10

0,20 %

| 07 | Environment |
| --- | --- |

07

Environment

494

447

0

11

459

92,78 %

13

0

13

2,60 %

23

0

0

23

4,62 %

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

08

Research

5 912

5 141

0

404

5 545

93,79 %

366

0

366

6,19 %

1

0

0

1

0,02 %

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

09

Information society and media

1 817

1 624

0

68

1 692

93,12 %

121

0

121

6,66 %

4

0

0

4

0,22 %

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

10

Direct research

847

383

4

75

462

54,49 %

385

0

385

45,46 %

0

0

0

0

0,04 %

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

11

Maritime affairs and Fisheries

1 005

975

1

2

977

97,20 %

1

2

3

0,31 %

25

0

0

25

2,48 %

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

12

Internal market

78

75

0

2

76

98,23 %

1

0

1

1,64 %

0

0

0

0

0,13 %

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

13

Regional policy

39 020

38 958

21

2

38 981

99,90 %

2

21

23

0,06 %

16

0

0

16

0,04 %

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

14

Taxation and customs union

139

131

0

2

133

95,51 %

2

0

2

1,15 %

5

0

0

5

3,34 %

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

15

Education and culture

1 817

1 497

0

144

1 641

90,33 %

173

0

173

9,52 %

3

0

0

3

0,15 %

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

16

Communication

223

216

0

2

217

97,52 %

2

0

2

0,83 %

4

0

0

4

1,65 %

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

17

Health and consumer protection

703

659

0

17

676

96,10 %

9

0

9

1,24 %

19

0

0

19

2,66 %

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

18

Area of freedom, security and justice

1 128

1 038

0

32

1 070

94,84 %

29

24

53

4,71 %

5

0

0

5

0,45 %

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

19

External relations

4 450

4 293

0

66

4 359

97,96 %

55

31

86

1,93 %

5

0

0

5

0,11 %

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

20

Trade

81

77

0

1

78

97,05 %

1

0

1

1,57 %

1

0

0

1

1,37 %

| 21 | Development & relations ACP States |
| --- | --- |

21

Development & relations ACP States

1 737

1 591

0

96

1 686

97,07 %

44

6

49

2,83 %

2

0

0

2

0,10 %

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

22

Enlargement

1 035

1 014

1

8

1 023

98,87 %

10

0

10

0,98 %

2

0

0

2

0,16 %

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

23

Humanitarian aid

1 070

1 055

0

3

1 058

98,90 %

2

0

2

0,20 %

10

0

0

10

0,90 %

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

24

Fight against fraud

78

77

0

0

77

98,77 %

0

0

0

0,02 %

1

0

0

1

1,21 %

| 25 | Policy coordination and legal advice |
| --- | --- |

25

Policy coordination and legal advice

199

189

0

4

193

97,10 %

4

0

4

2,21 %

1

0

0

1

0,69 %

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

26

Commission’s administration

1 111

1 013

0

58

1 070

96,32 %

38

0

38

3,44 %

3

0

0

3

0,24 %

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

27

Budget

67

61

0

3

63

94,71 %

3

0

3

4,02 %

1

0

0

1

1,27 %

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

28

Audit

12

11

0

0

11

96,29 %

0

0

0

2,55 %

0

0

0

0

1,16 %

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

29

Statistics

153

130

0

9

139

90,74 %

8

0

8

5,10 %

6

0

0

6

4,16 %

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

30

Pensions and related expenditure

1 210

1 205

0

0

1 205

99,63 %

0

0

0

0,00 %

4

0

0

4

0,37 %

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

31

Language Services

462

388

0

44

431

93,39 %

29

0

29

6,24 %

2

0

0

2

0,37 %

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

40

Reserves

415

0

0

0

0

0,00 %

0

0

0

0,00 %

415

0

0

415

100,00 %

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

90

Other Institutions

3 170

2 821

9

81

2 911

91,83 %

133

9

142

4,47 %

117

1

0

117

3,70 %

Total

147 270

140 554

328

1 861

142 744

96,93 %

3 528

259

3 787

2,57 %

738

1

1

740

0,50 %

11.   Implementation of payment appropriations by budget policy area

Implementation of payment appropriations by budget policy area

| EUR millions |
| --- |
| Policy Area | Payment Appropriations authorised | Payments made | Appropriations carried over to 2011 | Appropriations lapsing |
| From the year's approps | From carry-overs | Assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | Assigned revenue | Total | % | From the year's approps | From carry-overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9 | 10=7 + 8 + 9 | 11=10/1 | 12 | 13 | 14 | 15=12 + 13 + 14 | 16=15/1 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Payment Appropriations authorised

Payments made

Appropriations carried over to 2011

Appropriations lapsing

From the year's approps

From carry-overs

Assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

Assigned revenue

Total

%

From the year's approps

From carry-overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9

10=7 + 8 + 9

11=10/1

12

13

14

15=12 + 13 + 14

16=15/1

01

Economic and financial affairs

401

282

5

2

289

72,11 %

5

48

14

67

16,82 %

41

0

3

44

11,07 %

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

02

Enterprise

771

594

11

53

658

85,35 %

14

12

73

99

12,81 %

11

3

1

14

1,84 %

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

03

Competition

104

83

7

2

92

88,79 %

7

0

2

10

9,46 %

1

1

0

2

1,74 %

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

04

Employment and social affairs

8 543

7 353

121

7

7 481

87,57 %

18

19

6

43

0,51 %

392

627

0

1 019

11,93 %

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

05

Agriculture and rural development

58 421

55 009

22

580

55 611

95,19 %

25

332

1 968

2 325

3,98 %

482

3

0

485

0,83 %

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

3 369

2 710

88

62

2 859

84,85 %

17

70

100

187

5,56 %

313

4

6

323

9,59 %

| 07 | Environment |
| --- | --- |

07

Environment

438

329

19

10

358

81,79 %

16

0

7

24

5,44 %

51

4

0

56

12,78 %

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

08

Research

5 369

4 136

25

345

4 507

83,93 %

29

0

819

848

15,80 %

1

13

0

14

0,27 %

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

09

Information society and media

1 986

1 675

13

98

1 786

89,94 %

16

0

181

197

9,91 %

2

1

0

3

0,15 %

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

10

Direct research

789

338

31

69

438

55,51 %

39

0

305

344

43,58 %

3

4

0

7

0,91 %

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

11

Maritime affairs and Fisheries

827

652

2

1

656

79,23 %

3

35

1

39

4,74 %

121

12

0

133

16,03 %

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

12

Internal market

80

64

5

1

71

88,66 %

6

0

1

7

8,81 %

1

1

0

2

2,53 %

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

13

Regional policy

30 709

30 611

11

2

30 623

99,72 %

10

67

2

79

0,26 %

5

2

0

8

0,03 %

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

14

Taxation and customs union

136

117

6

2

126

92,53 %

7

1

2

9

6,98 %

0

1

0

1

0,49 %

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

15

Education and culture

1 783

1 416

13

143

1 572

88,16 %

15

5

186

205

11,51 %

4

2

0

6

0,33 %

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

16

Communication

231

192

12

2

206

89,24 %

12

0

2

14

6,09 %

8

3

0

11

4,67 %

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

17

Health and consumer protection

664

552

27

11

590

88,84 %

29

6

10

45

6,70 %

28

1

0

30

4,45 %

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

18

Area of freedom, security and justice

840

721

6

18

745

88,70 %

8

23

41

71

8,48 %

23

1

0

24

2,82 %

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

19

External relations

3 867

3 589

42

52

3 683

95,23 %

42

2

40

84

2,16 %

93

8

0

101

2,61 %

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

20

Trade

90

70

5

1

77

85,06 %

5

0

1

6

7,01 %

6

1

0

7

7,92 %

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

21

Development and relations with ACP States

1 819

1 585

35

88

1 708

93,90 %

29

0

26

55

3,03 %

50

5

0

56

3,07 %

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

22

Enlargement

1 152

1 113

8

10

1 130

98,06 %

7

0

9

16

1,39 %

5

2

0

6

0,55 %

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

23

Humanitarian aid

978

922

45

4

971

99,30 %

5

0

1

6

0,61 %

1

0

0

1

0,09 %

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

24

Fight against fraud

82

67

5

0

73

88,34 %

7

0

0

7

8,55 %

1

1

0

3

3,11 %

| 25 | Commission’s policy coordination and legal advice |
| --- | --- |

25

Commission’s policy coordination and legal advice

215

171

14

4

189

87,95 %

16

1

5

22

10,39 %

2

2

0

4

1,66 %

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

26

Commission’s administration

1 239

889

110

44

1 044

84,24 %

122

1

54

177

14,27 %

6

13

0

19

1,50 %

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

27

Budget

77

52

10

3

65

83,82 %

8

0

3

11

14,49 %

1

0

0

1

1,69 %

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

28

Audit

12

10

1

0

11

86,62 %

1

0

0

1

11,77 %

0

0

0

0

1,61 %

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

29

Statistics

148

113

6

7

126

84,99 %

6

0

10

17

11,21 %

5

1

0

6

3,79 %

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

30

Pensions and related expenditure

1 210

1 205

0

0

1 205

99,63 %

0

0

0

0

0,00 %

4

0

0

4

0,37 %

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

31

Language Services

486

362

23

41

427

87,75 %

25

0

31

57

11,65 %

2

1

0

3

0,60%

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

40

Reserves

193

0

0

0

0

0,00%

0

0

0

0

0,00%

193

0

0

193

100,00%

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

90

Other Institutions

3 496

2 490

286

80

2 857

81,72%

331

9

144

484

13,85%

117

38

0

155

4,43%

Total

130 527

119 472

1 018

1 741

122 231

93,64%

881

631

4 045

5 557

4,26%

1 972

756

11

2 739

2,10%

12.   Movements in commitments outstanding by policy area

Movements in commitments outstanding by policy area

| EUR millions |
| --- |
| Policy Area | Commitments outstanding at the end of the previous year | Commitments of the year | Total Commitments outstanding at year-end |
| Commitments carried forward from previous year | Decommitments /Revaluations/ Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation of commitments which cannot be carried over | Commitments outstanding at year-end |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitments outstanding at the end of the previous year

Commitments of the year

Total Commitments outstanding at year-end

Commitments carried forward from previous year

Decommitments /Revaluations/ Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation of commitments which cannot be carried over

Commitments outstanding at year-end

01

Economic and financial affairs

424

–5

–74

344

451

– 215

0

236

581

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

02

Enterprise

768

–20

– 301

447

845

– 357

0

488

935

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

03

Competition

9

–2

–7

0

92

–85

0

8

8

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

04

Employment and social affairs

26 278

–1 501

–7 071

17 706

11 378

– 410

–1

10 967

28 673

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

05

Agriculture and rural development

17 155

– 227

–9 400

7 528

58 880

–46 211

0

12 669

20 197

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

6 713

–99

–2 180

4 435

4 864

– 679

0

4 184

8 619

| 07 | Environment |
| --- | --- |

07

Environment

750

–29

– 225

496

459

– 133

0

325

821

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

08

Research

8 407

– 200

–3 019

5 188

5 545

–1 488

0

4 057

9 245

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

09

Information society and media

2 411

–65

–1 031

1 315

1 692

– 755

0

937

2 252

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

10

Direct research

158

–17

–90

51

462

– 348

–1

112

163

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

11

Maritime affairs and Fisheries

1 620

–64

– 428

1 128

977

– 227

0

750

1 877

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

12

Internal market

15

–1

–12

2

76

–59

0

17

20

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

13

Regional policy

93 232

– 114

–30 104

63 013

38 981

– 518

0

38 462

101 475

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

14

Taxation and customs union

83

–14

–53

15

133

–72

0

60

76

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

15

Education and culture

591

–50

– 283

258

1 641

–1 288

0

353

610

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

16

Communication

91

–9

–65

18

217

– 141

0

76

94

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

17

Health and consumer protection

706

–68

– 337

300

676

– 253

0

423

723

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

18

Area of freedom, security and justice

1 049

–92

– 220

737

1 070

– 525

0

545

1 282

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

19

External relations

9 034

– 327

–2 398

6 309

4 359

–1 285

0

3 074

9 383

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

20

Trade

19

–1

–12

6

78

–65

0

13

19

| 21 | Development/relations ACP States |
| --- | --- |

21

Development/relations ACP States

3 391

–95

–1 131

2 166

1 686

– 577

0

1 109

3 275

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

22

Enlargement

3 173

– 300

– 939

1 934

1 023

– 191

0

832

2 766

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

23

Humanitarian aid

513

–19

– 334

160

1 058

– 637

0

421

581

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

24

Fight against fraud

32

–4

–18

10

77

–55

0

22

32

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

25

Commission's policy coordination & legal advice

18

–2

–16

1

193

– 173

0

20

20

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

26

Commission’s administration

168

–15

– 143

11

1 070

– 901

0

169

179

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

27

Budget

10

0

–10

0

63

–55

0

8

8

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

28

Audit

1

0

–1

0

11

–10

0

1

1

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

29

Statistics

101

–6

–46

49

139

–79

0

59

108

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

30

Pensions and related expenditure

0

0

0

0

1 205

–1 205

0

0

0

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

31

Language Services

24

–1

–23

0

431

– 403

0

28

28

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

90

Other Institutions

328

–38

– 278

11

2 911

–2 579

0

332

344

Total

177 272

–3 385

–60 249

113 638

142 744

–61 982

–5

80 757

194 395

13.   Breakdown of commitments outstanding by the commitment's year of origin by policy area

Breakdown of commitments outstanding by the commitment's year of origin by policy area

| EUR millions |
| --- |
| Policy Area | <2004 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Total |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

<2004

2004

2005

2006

2007

2008

2009

2010

Total

01

Economic and financial affairs

0

0

13

63

32

40

196

236

581

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

02

Enterprise

16

3

13

17

57

112

229

488

935

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

03

Competition

0

0

0

0

0

0

0

8

8

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

04

Employment and social affairs

137

26

350

2 616

701

4 288

9 590

10 967

28 673

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

05

Agriculture and rural development

4

2

4

1 199

0

494

5 825

12 669

20 197

| 06 | Energy and transport |
| --- | --- |

06

Energy and transport

62

61

105

175

381

797

2 854

4 184

8 619

| 07 | Environment |
| --- | --- |

07

Environment

4

7

24

40

101

138

183

325

821

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

08

Research

183

117

213

423

792

1 369

2 091

4 057

9 245

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

09

Information society and media

12

8

42

73

179

337

664

937

2 252

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

10

Direct research

0

0

1

7

4

14

26

112

163

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

11

Maritime affairs and Fisheries

36

4

19

282

23

130

634

750

1 877

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

12

Internal market

0

0

0

0

0

0

2

17

20

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

13

Regional policy

522

553

884

10 452

729

16 566

33 307

38 462

101 475

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

14

Taxation and customs union

0

0

0

0

0

2

13

60

76

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

15

Education and culture

12

3

10

28

27

57

121

353

610

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

16

Communication

0

0

0

0

0

1

17

76

94

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

17

Health and consumer protection

4

7

4

17

29

74

164

423

723

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

18

Area of freedom, security and justice

0

1

12

13

98

167

446

545

1 282

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

19

External relations

450

187

215

636

1 074

1 588

2 158

3 074

9 383

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

20

Trade

0

0

0

0

1

1

4

13

19

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

21

Development and relations with ACP States

126

46

133

203

262

523

873

1 109

3 275

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

22

Enlargement

52

28

72

208

392

623

559

832

2 766

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

23

Humanitarian aid

2

0

0

0

7

27

124

421

581

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

24

Fight against fraud

0

0

0

0

2

3

5

22

32

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

25

Commission's policy coordination & legal advice

0

0

0

0

0

0

0

20

20

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

26

Commission’s administration

0

0

0

0

0

2

7

169

179

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

27

Budget

0

0

0

0

0

0

0

8

8

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

28

Audit

0

0

0

0

0

0

0

1

1

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

29

Statistics

1

0

2

4

5

6

31

59

108

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

30

Pensions and related expenditure

0

0

0

0

0

0

0

0

0

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

31

Language Services

0

0

0

0

0

0

0

28

28

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

90

Other Institutions

0

0

0

0

0

0

11

332

344

Total

1 623

1 055

2 116

16 455

4 895

27 359

60 136

80 757

194 395

14.   Summary of the implementation of budget revenue by Institution

Summary of the implementation of budget revenue by Institution

| EUR millions |
| --- |
| Institution | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| Initial | Final | Current year | Carried | Total | On entitlements of Current year | On entitlements Carried | Total |
| European Parliament | 129 | 130 | 158 | 109 | 267 | 154 | 89 | 243 | 186,52 % | 24 |
| European Council and Council | 54 | 54 | 94 | 7 | 101 | 87 | 6 | 93 | 172,12 % | 8 |
| Commission | 122 675 | 122 692 | 129 603 | 12 291 | 141 894 | 126 376 | 983 | 127 359 | 103,80 % | 14 534 |
| Court of Justice | 40 | 40 | 44 | 0 | 44 | 44 | 0 | 44 | 110,33 % | 0 |
| Court of Auditors | 20 | 20 | 19 | 0 | 19 | 19 | 0 | 19 | 94,72 % | 0 |
| Economic and Social Committee | 10 | 10 | 15 | 0 | 15 | 15 | 0 | 15 | 147,07 % | 0 |
| Committee of the Regions | 7 | 7 | 20 | 0 | 20 | 20 | 0 | 20 | 294,94 % | 0 |
| Ombudsman | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 96,40 % | 0 |
| European Data Protection Supervisor | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 68,01 % | 0 |
| Total | 122 937 | 122 956 | 129 955 | 12 407 | 142 362 | 126 717 | 1 078 | 127 795 | 103,94 % | 14 566 |

EUR millions

Institution

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried

Total

On entitlements of Current year

On entitlements Carried

Total

European Parliament

129

130

158

109

267

154

89

243

186,52 %

24

European Council and Council

54

54

94

7

101

87

6

93

172,12 %

8

Commission

122 675

122 692

129 603

12 291

141 894

126 376

983

127 359

103,80 %

14 534

Court of Justice

40

40

44

0

44

44

0

44

110,33 %

0

Court of Auditors

20

20

19

0

19

19

0

19

94,72 %

0

Economic and Social Committee

10

10

15

0

15

15

0

15

147,07 %

0

Committee of the Regions

7

7

20

0

20

20

0

20

294,94 %

0

Ombudsman

1

1

1

0

1

1

0

1

96,40 %

0

European Data Protection Supervisor

1

1

1

0

1

1

0

1

68,01 %

0

Total

122 937

122 956

129 955

12 407

142 362

126 717

1 078

127 795

103,94 %

14 566

15.   Implementation of commitment and payment appropriations by Institution

Implementation of commitment and payment appropriations by Institution

Commitment appropriations

Commitment appropriations

| EUR millions |
| --- |
| Institution | Commitment appropriations authorised | Commitments made | Appropriations carried over to 2011 | Appropriations lapsing |
| From the year's approps | From carry-overs | From assigned revenue | Total | % | From assigned revenue | Carry-overs by decision | Total | % | From the year's budget appropriations | from carry-overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9=7 + 8 | 10=9/1 | 11 | 12 | 13 | 14=11 + 12 + 13 | 15=14/1 |
| European Parliament | 1 752 | 1 552 | 9 | 24 | 1 586 | 90,50 % | 101 | 9 | 111 | 6,31 % | 55 | 1 | 0 | 56 | 3,19 % |
| European Council and Council | 703 | 593 | 0 | 41 | 634 | 90,08 % | 29 | 0 | 29 | 4,14 % | 41 | 0 | 0 | 41 | 5,79 % |
| Commission | 144 100 | 137 733 | 319 | 1 780 | 139 833 | 97,04 % | 3 395 | 250 | 3 645 | 2,53 % | 621 | 0 | 1 | 622 | 0,43 % |
| Court of Justice | 331 | 324 | 0 | 1 | 325 | 97,89 % | 1 | 0 | 1 | 0,44 % | 6 | 0 | 0 | 6 | 1,66 % |
| Court of Auditors | 149 | 138 | 0 | 0 | 138 | 93,02 % | 0 | 0 | 0 | 0,26 % | 10 | 0 | 0 | 10 | 6,72 % |
| Economic and Social Committee | 127 | 121 | 0 | 4 | 125 | 98,00 % | 0 | 0 | 0 | 0,14 % | 2 | 0 | 0 | 2 | 1,87 % |
| Committee of the Regions | 91 | 79 | 0 | 11 | 90 | 99,39 % | 0 | 0 | 0 | 0,02 % | 1 | 0 | 0 | 1 | 0,59 % |
| Ombudsman | 9 | 8 | 0 | 0 | 8 | 89,65 % | 0 | 0 | 0 | | 1 | 0 | 0 | 1 | 10,35 % |
| European Data Protection Supervisor | 7 | 6 | 0 | 0 | 6 | 82,73 % | 0 | 0 | 0 | | 1 | 0 | 0 | 1 | 17,27 % |
| Total | 147 270 | 140 554 | 328 | 1 861 | 142 744 | 96,93 % | 3 528 | 259 | 3 787 | 2,57 % | 738 | 1 | 1 | 740 | 0,50 % |

EUR millions

Institution

Commitment appropriations authorised

Commitments made

Appropriations carried over to 2011

Appropriations lapsing

From the year's approps

From carry-overs

From assigned revenue

Total

%

From assigned revenue

Carry-overs by decision

Total

%

From the year's budget appropriations

from carry-overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9=7 + 8

10=9/1

11

12

13

14=11 + 12 + 13

15=14/1

European Parliament

1 752

1 552

9

24

1 586

90,50 %

101

9

111

6,31 %

55

1

0

56

3,19 %

European Council and Council

703

593

0

41

634

90,08 %

29

0

29

4,14 %

41

0

0

41

5,79 %

Commission

144 100

137 733

319

1 780

139 833

97,04 %

3 395

250

3 645

2,53 %

621

0

1

622

0,43 %

Court of Justice

331

324

0

1

325

97,89 %

1

0

1

0,44 %

6

0

0

6

1,66 %

Court of Auditors

149

138

0

0

138

93,02 %

0

0

0

0,26 %

10

0

0

10

6,72 %

Economic and Social Committee

127

121

0

4

125

98,00 %

0

0

0

0,14 %

2

0

0

2

1,87 %

Committee of the Regions

91

79

0

11

90

99,39 %

0

0

0

0,02 %

1

0

0

1

0,59 %

Ombudsman

9

8

0

0

8

89,65 %

0

0

0

1

0

0

1

10,35 %

European Data Protection Supervisor

7

6

0

0

6

82,73 %

0

0

0

1

0

0

1

17,27 %

Total

147 270

140 554

328

1 861

142 744

96,93 %

3 528

259

3 787

2,57 %

738

1

1

740

0,50 %

Payment appropriations

Payment appropriations

| EUR millions |
| --- |
| Institution | Payment appropriations authorised | Payments made | Appropriations carried over to 2011 | Appropriations lapsing |
| From the year's approps | From carry-overs | From assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | From assigned revenue | Total | % | From the year's approps | From carry-overs | Assigned revenue
  (EFTA) | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9 | 10=7 + 8 + 9 | 11=10/1 | 12 | 13 | 14 | 15=12 + 13 + 14 | 16=15/1 |
| European Parliament | 1 938 | 1 321 | 165 | 20 | 1 507 | 77,74 % | 231 | 9 | 111 | 351 | 18,10 % | 55 | 25 | 0 | 81 | 4,16 % |
| European Council and Council | 748 | 543 | 34 | 43 | 620 | 82,89 % | 50 | 0 | 31 | 81 | 10,76 % | 41 | 7 | 0 | 48 | 6,35 % |
| Commission | 127 031 | 116 982 | 732 | 1 661 | 119 374 | 93,97 % | 550 | 622 | 3 901 | 5 073 | 3,99 % | 1 855 | 718 | 11 | 2 584 | 2,03 % |
| Court of Justice | 350 | 307 | 15 | 1 | 323 | 92,40 % | 17 | 0 | 1 | 18 | 5,24 % | 6 | 3 | 0 | 8 | 2,36 % |
| Court of Auditors | 210 | 122 | 60 | 0 | 182 | 86,90 % | 16 | 0 | 0 | 17 | 7,94 % | 10 | 1 | 0 | 11 | 5,15 % |
| Economic and Social Committee | 134 | 112 | 5 | 4 | 121 | 90,36 % | 8 | 0 | 1 | 9 | 6,95 % | 2 | 1 | 0 | 4 | 2,68 % |
| Committee of the Regions | 97 | 73 | 5 | 12 | 89 | 92,03 % | 7 | 0 | 0 | 7 | 6,91 % | 1 | 0 | 0 | 1 | 1,06 % |
| Ombudsman | 10 | 8 | 1 | 0 | 8 | 84,26 % | 1 | 0 | 0 | 1 | 5,23 % | 1 | 0 | 0 | 1 | 10,50 % |
| European Data protection Supervisor | 8 | 4 | 1 | 0 | 5 | 61,11 % | 1 | 0 | 0 | 1 | 16,79 % | 1 | 1 | 0 | 2 | 22,10 % |
| Total | 130 527 | 119 472 | 1 018 | 1 741 | 122 231 | 93,64 % | 881 | 631 | 4 045 | 5 557 | 4,26 % | 1 972 | 756 | 11 | 2 739 | 2,10 % |

EUR millions

Institution

Payment appropriations authorised

Payments made

Appropriations carried over to 2011

Appropriations lapsing

From the year's approps

From carry-overs

From assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

From assigned revenue

Total

%

From the year's approps

From carry-overs

Assigned revenue

(EFTA)

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9

10=7 + 8 + 9

11=10/1

12

13

14

15=12 + 13 + 14

16=15/1

European Parliament

1 938

1 321

165

20

1 507

77,74 %

231

9

111

351

18,10 %

55

25

0

81

4,16 %

European Council and Council

748

543

34

43

620

82,89 %

50

0

31

81

10,76 %

41

7

0

48

6,35 %

Commission

127 031

116 982

732

1 661

119 374

93,97 %

550

622

3 901

5 073

3,99 %

1 855

718

11

2 584

2,03 %

Court of Justice

350

307

15

1

323

92,40 %

17

0

1

18

5,24 %

6

3

0

8

2,36 %

Court of Auditors

210

122

60

0

182

86,90 %

16

0

0

17

7,94 %

10

1

0

11

5,15 %

Economic and Social Committee

134

112

5

4

121

90,36 %

8

0

1

9

6,95 %

2

1

0

4

2,68 %

Committee of the Regions

97

73

5

12

89

92,03 %

7

0

0

7

6,91 %

1

0

0

1

1,06 %

Ombudsman

10

8

1

0

8

84,26 %

1

0

0

1

5,23 %

1

0

0

1

10,50 %

European Data protection Supervisor

8

4

1

0

5

61,11 %

1

0

0

1

16,79 %

1

1

0

2

22,10 %

Total

130 527

119 472

1 018

1 741

122 231

93,64 %

881

631

4 045

5 557

4,26 %

1 972

756

11

2 739

2,10 %

16.   Agencies income: budget forecasts, entitlements and amounts received

Agencies income: budget forecasts, entitlements and amounts received

| EUR millions |
| --- |
| Agency | Forecasted income budget | Entitlements established | Amounts received | Outstanding | Funding Commission Policy Area |
| European Aviation Safety Agency | 137 | 109 | 106 | 4 | 06 |
| Frontex | 93 | 84 | 84 | 0 | 18 |
| European Centre for the Development of Vocational Training | 18 | 19 | 19 | 0 | 15 |
| European Police College | 8 | 8 | 8 | 0 | 18 |
| European Chemicals Agency | 75 | 386 | 386 | 0 | 02 |
| European Centre for Disease prevention and control | 58 | 48 | 49 | 0 | 17 |
| European Monitoring Centre for Drugs and Drug Addiction | 16 | 16 | 16 | 0 | 18 |
| European Environment Agency | 51 | 46 | 46 | 0 | 07 |
| Community Fisheries Control Agency | 11 | 10 | 10 | 0 | 11 |
| European Food Safety Authority | 73 | 74 | 74 | 0 | 17 |
| European Institute for Gender Equality | 6 | 6 | 6 | 0 | 04 |
| European GNSS supervisory authority | 9 | 16 | 16 | 0 | 06 |
| Fusion for Energy | 242 | 273 | 236 | 37 | 08 |
| Eurojust | 32 | 32 | 32 | 0 | 18 |
| European Maritime Safety Agency | 51 | 45 | 45 | 0 | 06 |
| Office For Harmonisation in the Internal Market | 174 | 179 | 179 | 0 | 12 |
| European Medicines Agency | 208 | 221 | 209 | 12 | 02 |
| European Network and Information Security Agency | 8 | 8 | 8 | 0 | 09 |
| European Union Agency for Fundamental Rights | 20 | 22 | 22 | 0 | 18 |
| European Railway Agency | 24 | 24 | 24 | 0 | 06 |
| European Agency for Safety and Health at Work | 15 | 14 | 14 | 0 | 04 |
| Translation Centre for the Bodies of the EU | 56 | 59 | 51 | 8 | 31 |
| European Training Foundation | 20 | 19 | 19 | 0 | 15 |
| Community Plant Variety Office | 13 | 12 | 12 | 0 | 17 |
| European Foundation for the Improvement of Living and Working Conditions | 21 | 21 | 21 | 0 | 04 |
| Education, Audiovisual & Culture Executive Agency | 49 | 49 | 49 | 0 | 15 |
| Executive Agency for Competitiveness and Innovation | 16 | 16 | 16 | 0 | 06 |
| European Research Council Executive Agency | 29 | 29 | 29 | 0 | 08 |
| Research Executive Agency | 34 | 36 | 34 | 3 | 08 |
| Executive Agency for the Public Health Programme | 7 | 7 | 7 | 0 | 17 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 10 | 0 | 06 |
| Total | 1 677 | 1 993 | 1 929 | 64 | |

EUR millions

Agency

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Funding Commission Policy Area

European Aviation Safety Agency

137

109

106

4

06

Frontex

93

84

84

0

18

European Centre for the Development of Vocational Training

18

19

19

0

15

European Police College

8

8

8

0

18

European Chemicals Agency

75

386

386

0

02

European Centre for Disease prevention and control

58

48

49

0

17

European Monitoring Centre for Drugs and Drug Addiction

16

16

16

0

18

European Environment Agency

51

46

46

0

07

Community Fisheries Control Agency

11

10

10

0

11

European Food Safety Authority

73

74

74

0

17

European Institute for Gender Equality

6

6

6

0

04

European GNSS supervisory authority

9

16

16

0

06

Fusion for Energy

242

273

236

37

08

Eurojust

32

32

32

0

18

European Maritime Safety Agency

51

45

45

0

06

Office For Harmonisation in the Internal Market

174

179

179

0

12

European Medicines Agency

208

221

209

12

02

European Network and Information Security Agency

8

8

8

0

09

European Union Agency for Fundamental Rights

20

22

22

0

18

European Railway Agency

24

24

24

0

06

European Agency for Safety and Health at Work

15

14

14

0

04

Translation Centre for the Bodies of the EU

56

59

51

8

31

European Training Foundation

20

19

19

0

15

Community Plant Variety Office

13

12

12

0

17

European Foundation for the Improvement of Living and Working Conditions

21

21

21

0

04

Education, Audiovisual & Culture Executive Agency

49

49

49

0

15

Executive Agency for Competitiveness and Innovation

16

16

16

0

06

European Research Council Executive Agency

29

29

29

0

08

Research Executive Agency

34

36

34

3

08

Executive Agency for the Public Health Programme

7

7

7

0

17

Trans-European Transport Network Executive Agency

10

10

10

0

06

Total

1 677

1 993

1 929

64

| EUR millions |
| --- |
| Type of revenue | Forecasted income budget | Entitlements established | Amounts received | Outstanding |
| Commission Subsidy | 1 061 | 1 040 | 1 037 | 3 |
| Fee income | 443 | 765 | 751 | 14 |
| Other income | 173 | 188 | 141 | 47 |
| Total | 1 677 | 1 993 | 1 929 | 64 |

EUR millions

Type of revenue

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Commission Subsidy

1 061

1 040

1 037

3

Fee income

443

765

751

14

Other income

173

188

141

47

Total

1 677

1 993

1 929

64

17.   Agencies: commitment & payment appropriations by agency

Agencies: commitment & payment appropriations by agency

| EUR millions |
| --- |
| Agency | Commitment appropriations | Payment appropriations |
| Appropriations | Commitments made | Carried to 2010 | Appropriations | Payments made | Carried to 2010 |
| European Aviation Safety Agency | 144 | 122 | 22 | 157 | 108 | 48 |
| Frontex | 95 | 89 | 3 | 118 | 82 | 27 |
| European Centre for the Development of Vocational Training | 21 | 19 | 2 | 21 | 17 | 3 |
| European Police College | 12 | 10 | 2 | 13 | 8 | 3 |
| European Chemicals Agency | 75 | 71 | 0 | 96 | 77 | 12 |
| European Centre for Disease prevention and control | 58 | 56 | 0 | 76 | 56 | 16 |
| European Monitoring Centre for Drugs and Drug Addiction | 16 | 16 | 0 | 17 | 15 | 1 |
| European Environment Agency | 52 | 44 | 8 | 58 | 44 | 13 |
| European Police Office | 93 | 91 | 0 | 93 | 68 | 22 |
| Community Fisheries Control Agency | 10 | 10 | 0 | 11 | 10 | 1 |
| European Food Safety Authority | 76 | 74 | 0 | 84 | 71 | 11 |
| European Institute for Gender Equality | 6 | 4 | 0 | 6 | 2 | 2 |
| European GNSS supervisory authority | 74 | 67 | 7 | 63 | 45 | 18 |
| Fusion for Energy | 551 | 550 | 1 | 302 | 192 | 56 |
| Eurojust | 34 | 31 | 3 | 38 | 28 | 9 |
| European Maritime Safety Agency | 55 | 53 | 0 | 53 | 46 | 1 |
| Office For Harmonisation in the Internal Market | 366 | 158 | 0 | 396 | 150 | 35 |
| European Medicines Agency | 210 | 201 | 0 | 248 | 196 | 45 |
| European Network and Information Security Agency | 8 | 8 | 0 | 10 | 8 | 2 |
| European Union Agency for Fundamental Rights | 20 | 20 | 0 | 27 | 19 | 8 |
| European Railway Agency | 24 | 24 | 0 | 29 | 23 | 5 |
| European Agency for Safety and Health at Work | 16 | 15 | 0 | 20 | 15 | 4 |
| Translation Centre for the Bodies of the EU | 56 | 43 | 0 | 60 | 43 | 4 |
| European Training Foundation | 19 | 19 | 0 | 21 | 20 | 1 |
| Community Plant Variety Office | 13 | 12 | 0 | 14 | 11 | 0 |
| European Foundation for the Improvement of Living and Working Conditions | 22 | 21 | 0 | 27 | 22 | 4 |
| Education, Audiovisual & Culture Executive Agency | 49 | 49 | 0 | 55 | 48 | 6 |
| Executive Agency for Competitiveness and Innovation | 16 | 15 | 0 | 17 | 15 | 2 |
| European Research Council Executive Agency | 29 | 29 | 0 | 32 | 30 | 2 |
| Research Executive Agency | 34 | 33 | 0 | 37 | 32 | 3 |
| Executive Agency for the Public Health Programme | 7 | 7 | 0 | 8 | 7 | 1 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 0 | 11 | 9 | 1 |
| Total | 2 271 | 1 972 | 49 | 2 217 | 1 516 | 366 |

EUR millions

Agency

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried to 2010

Appropriations

Payments made

Carried to 2010

European Aviation Safety Agency

144

122

22

157

108

48

Frontex

95

89

3

118

82

27

European Centre for the Development of Vocational Training

21

19

2

21

17

3

European Police College

12

10

2

13

8

3

European Chemicals Agency

75

71

0

96

77

12

European Centre for Disease prevention and control

58

56

0

76

56

16

European Monitoring Centre for Drugs and Drug Addiction

16

16

0

17

15

1

European Environment Agency

52

44

8

58

44

13

European Police Office

93

91

0

93

68

22

Community Fisheries Control Agency

10

10

0

11

10

1

European Food Safety Authority

76

74

0

84

71

11

European Institute for Gender Equality

6

4

0

6

2

2

European GNSS supervisory authority

74

67

7

63

45

18

Fusion for Energy

551

550

1

302

192

56

Eurojust

34

31

3

38

28

9

European Maritime Safety Agency

55

53

0

53

46

1

Office For Harmonisation in the Internal Market

366

158

0

396

150

35

European Medicines Agency

210

201

0

248

196

45

European Network and Information Security Agency

8

8

0

10

8

2

European Union Agency for Fundamental Rights

20

20

0

27

19

8

European Railway Agency

24

24

0

29

23

5

European Agency for Safety and Health at Work

16

15

0

20

15

4

Translation Centre for the Bodies of the EU

56

43

0

60

43

4

European Training Foundation

19

19

0

21

20

1

Community Plant Variety Office

13

12

0

14

11

0

European Foundation for the Improvement of Living and Working Conditions

22

21

0

27

22

4

Education, Audiovisual & Culture Executive Agency

49

49

0

55

48

6

Executive Agency for Competitiveness and Innovation

16

15

0

17

15

2

European Research Council Executive Agency

29

29

0

32

30

2

Research Executive Agency

34

33

0

37

32

3

Executive Agency for the Public Health Programme

7

7

0

8

7

1

Trans-European Transport Network Executive Agency

10

10

0

11

9

1

Total

2 271

1 972

49

2 217

1 516

366

| EUR millions |
| --- |
| Type of expenditure | Commitment appropriations | Payment appropriations |
| Appropriations | Commitments made | Carried to 2010 | Appropriations | Payments made | Carried to 2010 |
| Staff | 673 | 656 | 3 | 688 | 649 | 19 |
| Administrative expenses | 283 | 264 | 2 | 365 | 249 | 93 |
| Operational expenses | 1 314 | 1 052 | 44 | 1 165 | 618 | 254 |
| Total | 2 271 | 1 972 | 49 | 2 217 | 1 516 | 366 |

EUR millions

Type of expenditure

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried to 2010

Appropriations

Payments made

Carried to 2010

Staff

673

656

3

688

649

19

Administrative expenses

283

264

2

365

249

93

Operational expenses

1 314

1 052

44

1 165

618

254

Total

2 271

1 972

49

2 217

1 516

366

18.   Budget outturn including Agencies

Budget outturn including Agencies

| EUR millions |
| --- |
| | European Union | Agencies | Elimination of subsidies to agencies | Total |
| Revenue for the financial year | 127 795 | 1 929 | (1 037) | 128 687 |
| Payments against current year appropriations | (121 213) | (1 320) | 1 037 | (121 495) |
| Payment appropriations carried over to year N+1 | (2 797) | (366) | 0 | (3 164) |
| Cancellation of unused appropriations carried over from year N-1 | 741 | 181 | 0 | 922 |
| Exchange differences for the year | 22 | 0 | 0 | 22 |
| Budget Outturn | 4 549 | 424 | 0 | 4 972 |

EUR millions

European Union

Agencies

Elimination of subsidies to agencies

Total

Total

Revenue for the financial year

127 795

1 929

(1 037)

128 687

128 687

Payments against current year appropriations

(121 213)

(1 320)

1 037

(121 495)

(121 495)

Payment appropriations carried over to year N+1

(2 797)

(366)

0

(3 164)

(3 164)

Cancellation of unused appropriations carried over from year N-1

741

181

0

922

922

Exchange differences for the year

22

0

0

22

22

Budget Outturn

Budget Outturn

4 549

4 549

424

424

0

0

4 972

4 972

Explanatory notes to the consolidated reports on implementation of the budget

Explanatory notes to the consolidated reports on implementation of the budget

1.   BUDGETARY PRINCIPLES, STRUCTURE AND APPROPRIATIONS

1.1.   LEGAL BASIS AND THE FINANCIAL REGULATION

LEGAL BASIS AND THE FINANCIAL REGULATION

The budgetary accounts are kept in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 (OJ L 248, 16.9.2002) on the Financial Regulation applicable to the general budget of the European Union and Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of this Financial Regulation. The general budget, the main instrument of the EU's financial policy, is the instrument which provides for and authorises the EU's revenue and expenditure every year.

Every year, the Commission estimates all the Institutions′ revenue and expenditure for the year and draws up a preliminary draft budget which it sends to the budgetary authority. On the basis of this preliminary draft budget, the Council draws up a draft budget which is then the subject of negotiations between the two arms of the budgetary authority. The President of Parliament declares that the budget has been finally adopted making the budget enforceable. The task of executing the budget is mainly the responsibility of the Commission.

1.2.   BUDGETARY PRINCIPLES

BUDGETARY PRINCIPLES

The general budget of the European Union is governed by a number of basic principles:

—   Unity and budget accuracy: all expenditure and revenue must be in a single budget, booked on a budget line and expenditure may not exceed authorised appropriations;

—   universality: this principle comprises two rules:

the rule of non-assignment, meaning that budget revenue must not be earmarked for specific items of expenditure (total revenue must cover total expenditure);

the gross budget rule, meaning that revenue and expenditure are entered in full in the budget without any adjustment against each other;

—   annuality: appropriations are authorised for a single year so must be used during that year;

—   equilibrium: the revenue and expenditure shown in the budget must be in balance (estimated revenue must equal payment appropriations);

—   specification: each appropriation is assigned to a specific purpose and a specific objective;

—   unit of account: the budget is drawn up and implemented in euros, as are the accounts;

—   sound financial management: budget appropriations are used in accordance with the principle of sound financial management, i.e. economy, efficiency and effectiveness;

—   transparency: the budget and amending budgets and final accounts are published in the Official Journal of the European Union.

1.3.   BUDGET STRUCTURE

BUDGET STRUCTURE

The budget consists of:

| (a) | a general statement of revenue; |
| --- | --- |

(a)

a general statement of revenue;

| (b) | separate sections giving the statements of revenue and expenditure of each Institution: Section I: Parliament; Section II: Council; Section III: Commission; Section IV: Court of Justice; Section V: Court of Auditors; Section VI: Economic and Social Committee; Section VII: Committee of the Regions; Section VIII: Ombudsman; Section IX: European Data Protection Supervisor. |
| --- | --- |

(b)

separate sections giving the statements of revenue and expenditure of each Institution: Section I: Parliament; Section II: Council; Section III: Commission; Section IV: Court of Justice; Section V: Court of Auditors; Section VI: Economic and Social Committee; Section VII: Committee of the Regions; Section VIII: Ombudsman; Section IX: European Data Protection Supervisor.

Each Institution's items of revenue and expenditure are classified according to their type or the use to which they are assigned under titles, chapters, articles and items.

A part of the funds of the ECSC in liquidation were placed at the disposal of the operational budget of the ECSC in liquidation. This operational budget was adopted annually by the Commission, after consultation with the Council and the European Parliament. The last budget was drawn up for the period of 1st January to 23 July 2002. As from 24 July 2002, the revenue and charges connected with the operational budget are included in the revenue and expenditure account of the ECSC in liquidation. The remaining commitments to be fulfilled are shown on the liability side of the balance sheet.

1.4.   STRUCTURE OF THE BUDGETARY ACCOUNTS

STRUCTURE OF THE BUDGETARY ACCOUNTS

1.4.1.   
  General overview

General overview

Only the Commission budget contains administrative appropriations and operating appropriations. The other Institutions have only administrative appropriations. Furthermore, the budget distinguishes between two types of appropriation: non-differentiated appropriations and differentiated appropriations.

Non-differentiated appropriations are used to finance operations of an annual nature (which comply with the principle of annuality). They cover all the administrative chapters of the budget of the Commission Section and the whole of every other section, EAGF appropriations of an annual nature and certain technical appropriations (repayments, borrowing and lending guarantees, etc.) In the case of non-differentiated appropriations, the amount of commitment appropriations is the same as that of payment appropriations.

Differentiated appropriations were introduced in order to reconcile the principle of annuality with the need to manage multi-annual operations. They are intended to cover multi-annual operations and comprise all the other appropriations in all Chapters except Chapter 1 of the Commission Section. Differentiated appropriations are split into commitment and payment appropriations:

—   commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may, in accordance with Article 76(3) of the Financial Regulation, be broken down over several years into annual instalments where the basic act so provides.

—   payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years.

1.4.2.   
  Origin of Appropriations

Origin of Appropriations

The main source of appropriations is the Union's budget for the current year. However, there are other types of appropriations resulting from the provisions of the Financial Regulation. They come from previous financial years or outside sources:

| — | Initial budget appropriations adopted for the current year can be supplemented with transfers between lines in accordance with the rules laid down in Articles 22 to 24 of the Financial Regulation (No 1605/2002 of 25 June 2002) and by amending budgets (covered by Articles 37 and 38 of the Financial Regulation). |
| --- | --- |

—

Initial budget appropriations adopted for the current year can be supplemented with transfers between lines in accordance with the rules laid down in Articles 22 to 24 of the Financial Regulation (No 1605/2002 of 25 June 2002) and by amending budgets (covered by Articles 37 and 38 of the Financial Regulation).

Initial budget appropriations

transfers

| — | Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only in accordance with Article 9(4) of the Financial Regulation; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed (Article 9(2)(a) of the Financial Regulation) or if the legal base is adopted late (Article 9(2)(b)). Both commitment and payment appropriations may be carried over (Article 9(3)) and (iii) appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme (Article 157 of the Financial Regulation). |
| --- | --- |

—

Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only in accordance with Article 9(4) of the Financial Regulation; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed (Article 9(2)(a) of the Financial Regulation) or if the legal base is adopted late (Article 9(2)(b)). Both commitment and payment appropriations may be carried over (Article 9(3)) and (iii) appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme (Article 157 of the Financial Regulation).

Appropriations carried over

| — | Assigned revenue which is made up of (i) refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit; (ii) EFTA appropriations: The agreement on the European Economic Area provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries; (iii) Revenue from third parties/ other countries that have concluded agreements with the European Union involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit (Article 10 and Article 18(1)(a) and (d) of the Financial Regulation); (iv) Work for third parties: As part of their research activities, the EU research centres may work for outside bodies, (Article 161(2) of the Financial Regulation). Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit (Article 10 and Article 18(1)(d) of the Financial Regulation); and (v) Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit. In the area of Structural Funds the re-inscription is based on a Commission Decision (Article 18(2) of the Financial Regulation and Article 228 of its Implementing Rules). |
| --- | --- |

—

Assigned revenue which is made up of (i) refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit; (ii) EFTA appropriations: The agreement on the European Economic Area provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries; (iii) Revenue from third parties/ other countries that have concluded agreements with the European Union involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit (Article 10 and Article 18(1)(a) and (d) of the Financial Regulation); (iv) Work for third parties: As part of their research activities, the EU research centres may work for outside bodies, (Article 161(2) of the Financial Regulation). Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit (Article 10 and Article 18(1)(d) of the Financial Regulation); and (v) Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit. In the area of Structural Funds the re-inscription is based on a Commission Decision (Article 18(2) of the Financial Regulation and Article 228 of its Implementing Rules).

Assigned revenue

1.4.3.   
  Composition of Appropriations Available

Composition of Appropriations Available

—   Final budget appropriations= initial budget appropriations adopted + amending budget appropriations + transfers;

—   Additional appropriations= assigned revenue (see above) + appropriations carried over from the previous financial year or made available again following decommitments;

—   Total appropriations authorised= final budget appropriations + additional appropriations

—   Appropriations for the year (as used to calculate the budgetary result)= final budget appropriations + assigned revenue.

(as used to calculate the budgetary result)

1.5.   BUDGET IMPLEMENTATION

BUDGET IMPLEMENTATION

The implementation of the budget is governed by the Financial Regulation, Article 48(1) of which states: "The Commission shall implement... the budget in accordance with this Regulation, on its own responsibility and within the limits of the appropriations authorised." Article 50 states that the Commission shall confer on the Institutions the requisite powers for the implementation of the sections of the budget relating to them.

1.6.   OUTSTANDING COMMITMENTS (RAL)

OUTSTANDING COMMITMENTS (RAL)

With the introduction of differentiated appropriations, a gap developed between commitments entered into and payments made: this gap, corresponding to outstanding commitments, represents the time-lag between when the commitments are entered into and when the corresponding payments are made.

2.   EXPLANATION OF THE REPORTS ON THE IMPLEMENTATION OF THE BUDGET

2.1.   BUDGET OUTTURN FOR THE YEAR (Table 1)

BUDGET OUTTURN FOR THE YEAR (Table 1)

2.1.1.   
  General

General

The amounts of own resources entered in the accounts are those credited in the course of the year to the accounts opened in the Commission's name by the governments of the Member States. Revenue comprises also, in the case of a surplus, the budget outturn for the previous financial year. The other revenue entered in the accounts is the amount actually received in the course of the year.

For the purposes of calculating the budget outturn for the year, expenditure comprises payments made against the year's appropriations for payments plus any of the appropriations for that year that are carried over to the following year. Payments made against the year's appropriations for payments means payments that are made by the accounting officer by 31 December of the financial year. In the case of the European Agricultural Guarantee Fund, the payments are those effected by the Member States between 16 October 2009 and 15 October 2010, provided that the accounting officer was notified of the commitment and authorisation by 31 January 2011. EAGF expenditure may be subject to a conformity decision following controls in the Member States.

The budget outturn comprises two elements: the result of the European Union and the result of the participation of the EFTA countries belonging to the EEA. In accordance with Article 15 of Regulation No 1150/2000 on own resources, this outturn represents the difference between:

| — | total revenue received for that year; |
| --- | --- |

—

total revenue received for that year;

| — | and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year. |
| --- | --- |

—

and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year.

The following are added to or deducted from the resulting figure:

| — | the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year; |
| --- | --- |

—

the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year;

| — | the balance of exchange-rate gains and losses recorded during the year. |
| --- | --- |

—

the balance of exchange-rate gains and losses recorded during the year.

The budget outturn is returned to the Member States the following year through deduction of their amounts due for that financial year.

The budget outturn is returned to the Member States the following year through deduction of their amounts due for that financial year.

Appropriations carried over from the previous financial year in respect of contributions by and work for third parties, which by definition never lapse, are included with the additional appropriations for the financial year. This explains the difference between carryovers from the previous year in the 2010 budget implementation statements and those carried over to the following year in the 2009 budget implementation statements. The payment appropriations for re-use and appropriations made available again following the repayment of payments on account are disregarded when calculating the outturn for the year.

The payment appropriations carried over include: automatic carryovers and carryovers by decision. The cancellation of unused payment appropriations carried over from the previous year shows the cancellations on appropriations carried over automatically and by decision. It also includes the decrease in assigned revenue appropriations carried over to the next year in comparison with 2009.

2.1.2.   
  Reconciliation of the budget outturn with the economic outturn

Reconciliation of the budget outturn with the economic outturn

The economic outturn for the year is calculated on the basis of accrual accounting principles. The budget outturn is however based on modified cash accounting rules, in accordance with the Financial Regulation. As both are the result of the same underlying transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items.

Reconciliation: economic result – budget outturn

Reconciliation: economic result – budget outturn

| EUR millions |
| --- |
| | 2010 | 2009
  restated |
| ECONOMIC OUTTURN FOR THE YEAR | 17 232 | 6 887 |
| Revenues |
| Entitlements established in current year but not yet collected | (3 132) | (2 806) |
| Entitlements established in previous years and collected in current year | 1 346 | 2 563 |
| Accrued revenue (net) | (371) | 436 |
| Expenditure |
| Accrued expenses (net) | (7 426) | 2 951 |
| Expenses prior year paid in current year | (386) | (432) |
| Net-effect pre-financing | (678) | (9 458) |
| Payment appropriations carried over to next year | (2 798) | (1 759) |
| Payments made from carry-overs & cancellation of unused payment appropriations | 1 760 | 4 573 |
| Movement in provisions | (323) | (329) |
| Other | (257) | (153) |
| Economic outturn agencies + ECSC | (418) | (209) |
| BUDGET OUTTURN FOR THE YEAR* | 4 549 | 2 264 |

EUR millions

2010

2009

restated

ECONOMIC OUTTURN FOR THE YEAR

ECONOMIC OUTTURN FOR THE YEAR

17 232

17 232

6 887

6 887

Revenues

Revenues

Entitlements established in current year but not yet collected

(3 132)

(2 806)

Entitlements established in previous years and collected in current year

1 346

2 563

Accrued revenue (net)

(371)

436

Expenditure

Expenditure

Accrued expenses (net)

(7 426)

2 951

Expenses prior year paid in current year

(386)

(432)

Net-effect pre-financing

(678)

(9 458)

Payment appropriations carried over to next year

(2 798)

(1 759)

Payments made from carry-overs & cancellation of unused payment appropriations

1 760

4 573

Movement in provisions

(323)

(329)

Other

(257)

(153)

Economic outturn agencies + ECSC

Economic outturn agencies + ECSC

(418)

(209)

BUDGET OUTTURN FOR THE YEAR*

BUDGET OUTTURN FOR THE YEAR*

4 549

4 549

2 264

2 264

Reconciling items - Revenue

Reconciling items - Revenue

The actual budgetary revenue for a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years. Therefore the entitlements established in the current year but not yet collected are to be deducted from the economic outturn for reconciliation purposes as they do not form part of budgetary revenue. On the contrary the entitlements established in previous years and collected in current year must be added to the economic outturn for reconciliation purposes.

entitlements established in the current year but not yet collected

entitlements established in previous years and collected in current year

The net accrued revenue mainly consists of accrued revenue for agricultural levies, own resources and interests and dividends. Only the net-effect, i.e. accrued revenue for current year minus reversal accrued revenue from previous year, is taken into consideration.

net accrued revenue

Reconciling items - Expenditure

Reconciling items - Expenditure

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EU funds but not yet reported to the Commission.

net accrued expenses

While accrued expenses are not considered as budgetary expenditure, the payments made in the current year relating to invoices registered in prior years are part of current year's budgetary expenditure.

current year relating to invoices registered in prior years

The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid in the current year and recognised as budgetary expenditure of the year and (2) the clearing of the pre-financing paid in current year or previous years through the acceptance of eligible costs. The latter represent an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

net effect of pre-financing

Besides the payments made against the year's appropriations, the appropriations for that year that are carried to the next year also need to be taken into account in calculating the budget outturn for the year (in accordance with Article 15 of Regulation No 1150/2000). The same applies for the budgetary payments made in the current year from carry-overs and the cancellation of unused payment appropriations.

carried to the next year

carry-overs and the cancellation of unused payment appropriations

The movement in provisions relate to year-end estimates made in the accrual accounts (employee benefits mainly) that do not impact the budgetary accounts. Other reconciling amounts comprise different elements such as asset depreciation, asset acquisitions, capital lease payments and financial participations for which the budgetary and accrual accounting treatments differ.

movement in provisions

Other reconciling amounts

Finally the economic outturns of the agencies and the ECSC that are included in the consolidated economic outturn need to be excluded since their budgetary execution is not part of the consolidated budget outturn.

agencies and the ECSC

2.2.   COMPARISON OF BUDGET AND ACTUAL AMOUNTS (Table 2)

COMPARISON OF BUDGET AND ACTUAL AMOUNTS (Table 2)

In the initial adopted budget, signed by the President of the European Parliament on 17 December 2009, the amount of payment appropriations was EUR 122 937 million and the amount to be financed by own resources totalled EUR 121 507 million. The revenue and expenditure estimates in the initial budget are typically adjusted during the budgetary year, such modifications being presented in amending budgets. Adjustments in the GNI-based own resources ensure that budgeted revenue matches exactly budgeted expenditure. In accordance with the principle of equilibrium, budget revenue and expenditure (payment appropriations) must be in balance.

Revenue:

Revenue:

During 2010 eight amending budgets were adopted. Taking them into account, the total final revenue in the 2010 budget amounted to EUR 122 956 million. This was financed by own resources totalling EUR 119 270 million (thus EUR 2 237 million less than initially forecasted) and the remainder by other revenue. The reduced need for own resources stemmed mainly from the inclusion of EUR 2 254 million relating to the surplus of the previous year.

As far as the own resources are concerned, the collection of traditional own resources matched almost the forecasted amounts, namely because the budget estimates were modified at the time the Amending Budget No 4/2010 was established (they were increased by EUR 1 516 million). This adjustment was based on the new macroeconomic forecasts of spring 2010, which were more optimistic than the previous ones.

The final Member States′ VAT and GNI payments also correspond closely to the final budgetary estimate. The differences between the forecasted amounts and the amounts actually paid are due to the differences between the euro rates used for budgetary purposes and the rates in force at the time when the Member States outside the EMU actually made their payments.

Expenditure:

Expenditure:

The year 2010, the fourth year of the current programming period, saw programmes reaching their cruising speed and the start of the final closure of old programmes. At the end of the year outstanding commitments made before 2007 represent some 10 % of the total RAL.

For commitments, the initial budget and hence the political targets set were carried out virtually as planned. The implementation rate, excluding the unused reserve of EUR 415 million for European Globalisation Adjustment Fund and EUR 28 million of unused provisional appropriations (amounts placed in reserve pending the fulfilment of certain conditions, which remain in reserve at the end of the budgetary year) reached 99,4 %. Adjustments during the year concerned EUR 80 million for the European Solidarity Fund, unforeseeable expenditure by nature, and for administrative expenditure EUR 10 million related to the setting-up of the European External Action Service and EUR 10 million for the European Parliament following the entry into force of the Lisbon treaty. The total implementation of EUR 140 554 left EUR 554 million unused. After the carryover of EUR 259 million to 2011, the largest item being Energy Projects to aid Economic Recovery for EUR 147 million, an amount of EUR 295 million lapsed.

The implementation rate for payments, excluding un-mobilised Emergency Aid Reserve (EUR 193 million) and provisional appropriations (EUR 48 million), was 97,4 % of the budget, total appropriations were amended during the course of the year only for the increases of administrative expenditure mentioned above.

Contrary to previous years, there was no reduction in payment appropriations via an amending budget at the year-end. The main adjustment was carried out via the global transfer which reinforced Regional policy by EUR 1 125 million by reducing appropriations for Rural Development. The Commission reinforced also the Cohesion Fund with some EUR 600 million via internal transfers. The unused voted appropriations, excluding reserves, amounted to EUR 3 243 million and after the carryover of EUR 1 513 million, a total of EUR 1 730 million spread across the Multi-annual Financial Framework (‘MFF’) headings lapsed.

A more detailed analysis of budgetary adjustments, their relevant context, their justification and their impact is presented in Commission's Report on Budgetary and Financial Management 2010, Part A overview at budget level and Part B dealing with each MFF Heading.

2.3.   REVENUE (Table 3)

REVENUE (Table 3)

The revenue of the general budget of the European Union can be divided into two main categories: own resources and other revenue. This is laid down in Article 311 of the Treaty on the Functioning of the European Union, which states that: ‘Without prejudice to other revenue, the budget shall be financed wholly from own resources.’ The main bulk of budgetary expenditure is financed by own resources. Other revenue represents only a minor part of total financing.

There are three categories of own resources: traditional own resources, the VAT resource and the GNI resource. Traditional own resources, in turn, comprise sugar levies and customs duties. A correction mechanism in favour of the United Kingdom as well as a gross reduction in the annual GNI-based contribution of Netherlands and Sweden are also part of the own resources system.

2.3.1.   
  Traditional own resources

Traditional own resources

Traditional own resources: All established amounts of traditional own resources must be entered in one or other of the accounts kept by the competent authorities.

| — | In the ordinary account provided for in Article 6(3)(a) of Regulation No 1150/2000: all amounts recovered or guaranteed. |
| --- | --- |

—

In the ordinary account provided for in Article 6(3)(a) of Regulation No 1150/2000: all amounts recovered or guaranteed.

| — | In the separate account provided for in Article 6(3)(b) of Regulation No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account. |
| --- | --- |

—

In the separate account provided for in Article 6(3)(b) of Regulation No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account.

For the separate account, the Member States send the Commission a quarterly statement that includes:

| — | the balance to be recovered during the previous quarter, |
| --- | --- |

—

the balance to be recovered during the previous quarter,

| — | the established entitlements during the quarter in question, |
| --- | --- |

—

the established entitlements during the quarter in question,

| — | rectifications of the base (corrections/cancellations) during the quarter in question, |
| --- | --- |

—

rectifications of the base (corrections/cancellations) during the quarter in question,

| — | amounts written off (which cannot be made available according to Article 17(2) of Reg. 1150/2000), |
| --- | --- |

—

amounts written off (which cannot be made available according to Article 17(2) of Reg. 1150/2000),

| — | the amounts recovered during the quarter in question, |
| --- | --- |

—

the amounts recovered during the quarter in question,

| — | the balance to be recovered at the end of the quarter in question. |
| --- | --- |

—

the balance to be recovered at the end of the quarter in question.

Traditional own resources must be entered in the Commission's account with the Treasury or the body appointed by the Member State at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established (or recovered in the case of the separate account). Member States retain, by way of collection costs, 25 % of traditional own resources. The contingent own resources entitlements are adjusted on the basis of the likelihood of their recovery.

2.3.2.   
  VAT-based resources and GNI-based resources

VAT-based resources and GNI-based resources

VAT-based own resource derive from the application of a uniform rate, for all Member States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(b) of the ORD 2007. The uniform rate is fixed at 0,30 % except for the period 2007-2013 in which the rate of call for Austria is fixed at 0,225, for Germany at 0,15 % and for Netherlands and Sweden at 0,10 %. The VAT base is capped at 50 % of GNI for all Member States.

VAT-based own resources derive from the application of a uniform rate, for all Member States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(c) of the Council Decision of 29 September 2000. The VAT base is capped at 50 % of GNI for all Member States.

The GNI-based resource is a variable resource intended to supply the revenue required, in any given year, to cover expenditure exceeding the amount collected from traditional own resources, VAT resources and miscellaneous revenue. The revenue derives from the application of a uniform rate to the aggregate GNI of all the Member States.

VAT and GNI-based resources are determined on the basis of forecasts of VAT and GNI bases made when the preliminary draft budget is being prepared. These forecasts are subsequently revised; the figures are updated during the budget year in question by means of an amending budget.

The actual figures for the VAT and GNI bases are available in the course of the year following the budget year in question. The Commission calculates the differences between the amounts due by the Member States by reference to the actual bases and the sums actually paid on the basis of the (revised) forecasts. These VAT and GNI balances, either positive or negative, are called in by the Commission from the Member States for the first working day of December of the year following the budget year in question. Corrections may still be made to the actual VAT and GNI bases during the subsequent four years, unless a reservation is issued. The balances calculated earlier are adjusted and the difference is called in at the same time as the VAT and GNI balances for the previous budget year.

When conducting controls of VAT statements and GNI data, the Commission may notify reservations to the Member States regarding certain points which may have consequences to their own resources contributions. These points, for example, may result from an absence of acceptable data, or a need to develop a suitable methodology. These reservations have to be seen as potential claims on the Member States for uncertain amounts as their financial impact cannot be estimated with accuracy. When the exact amount can be determined, the corresponding VAT and GNI-based resources are called either in connection with VAT and GNI balances or by individual calls for funds.

2.3.3.   
  UK correction

UK correction

This mechanism reduces the own resources payments of the UK in proportion to what is known as its ‘budgetary imbalance’ and increases the own resources payments of the other Member States correspondingly. The budgetary imbalance correction mechanism in favour of the United Kingdom was instituted by the European Council in Fontainebleau (June 1984) and the resulting Own Resources Decision of 7 May 1985. The purpose of the mechanism was to reduce the budgetary imbalance of the UK through a reduction in its payments to the EU. Germany, Austria, Sweden and Netherlands benefit from a reduced financing of the correction (restricted to one fourth of their normal share).

2.4.   EXPENDITURE (Tables 4 to 13)

EXPENDITURE (Tables 4 to 13)

2.4.1.   
  Financial Framework 2007-2013

Financial Framework 2007-2013

| EUR millions |
| --- |
| | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| 1. | Sustainable Growth |

EUR millions

2007

2008

2009

2010

2011

2012

2013

1.

Sustainable Growth

53 979

57 653

61 696

63 555

63 974

66 964

69 957

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

2.

Preservation & management of natural resources

55 143

59 193

56 333

59 955

60 338

60 810

61 289

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

3.

Citizenship, freedom, security & justice

1 273

1 362

1 518

1 693

1 889

2 105

2 376

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

4.

EU as a global player

6 578

7 002

7 440

7 893

8 430

8 997

9 595

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

5.

Administration

7 039

7 380

7 525

7 882

8 334

8 670

9 095

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

6.

Compensations

445

207

210

0

0

0

0

Commitment appropriations:

Commitment appropriations:

124 457

124 457

132 797

132 797

134 722

134 722

140 978

140 978

142 965

142 965

147 546

147 546

152 312

152 312

Total payment appropriations:

122 190

129 681

120 445

134 289

134 280

141 360

143 331

This section describes the main categories of EU expenditure, classified by heading of the financial framework 2007-2013. The 2010 financial year was the fourth covered by the financial framework 2007-2013. The overall ceiling on commitments appropriations for 2010 comes to EUR 140 978 million, equivalent to 1,18 % of GNI. The corresponding ceiling on the appropriations for payments comes to EUR 134 289 million, i.e. 1,12 % of GNI. The above table shows the financial framework at current prices estimated for 2013.

Heading 1 –   Sustainable growth

Heading 1 –

Sustainable growth

This Heading divided into two separate, but interlinked components:

| — | 1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies. |
| --- | --- |

—

1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies.

| — | 1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation.. |
| --- | --- |

—

1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation..

Heading 2 –   Preservation and management of natural resources

Heading 2 –

Preservation and management of natural resources

Heading 2 includes the common agricultural and fisheries policies, rural development and environmental measures, in particular Natura 2000. The amount earmarked for the common agricultural policy reflects the agreement reached at the Brussels European Council in October 2002.

Heading 3 –   Citizenship, freedom, security and justice

Heading 3 –

Citizenship, freedom, security and justice

The new heading 3 (Citizenship, freedom, security and justice) reflects the growing importance attached to certain fields where the EU has been assigned new tasks – justice and home affairs, border protection, immigration and asylum policy, public health and consumer protection, culture, youth, information and dialogue with citizens. It is split in two components:

| — | 3a. Freedom, Security and Justice |
| --- | --- |

—

3a. Freedom, Security and Justice

| — | 3b. Citizenship |
| --- | --- |

—

3b. Citizenship

Heading 4 –   The EU as a global player

Heading 4 –

The EU as a global player

Heading 4 covers all external action, including pre-accession instruments. Whereas the Commission had proposed to integrate the European Development Fund (EDF) into the financial framework, the European Council and the European Parliament agreed to leave it outside.

Heading 5 –   Administration

Heading 5 –

Administration

This heading covers administrative expenditure for all institutions, pensions and the European Schools. For the Institutions other than the Commission, these costs make up the total of their expenditure, but the Agencies and other bodies make both administrative and operational expenditure.

Heading 6 –   Compensations

Heading 6 –

Compensations

In accordance with the political agreement that the new Member States should not become net-contributors to the budget at the very beginning of their membership, compensation was foreseen under this heading. This amount was available as transfers to them to balance their budgetary receipts and contributions.

2.4.2.   
  Policy areas

Policy areas

As part of its use of Activity Based Management (ABM) the Commission implements Activity Based Budgeting (ABB) in its planning and management processes. ABB involves a budget structure where budget titles correspond to policy areas and budget chapters to activities.

ABB aims to provide a clear framework for translating the Commission's policy objectives into action, either through legislative, financial or any other public policy means. By structuring the Commission's work in terms of activities, a clear picture is obtained of the Commission's undertakings and simultaneously a common framework is established for priority setting. Resources are allocated to priorities during the budget procedure, using the activities as the building blocks for budgeting purposes. By establishing such a link between activities and the resources allocated to them, ABB aims to increase efficiency and effectiveness in the use of resources in the Commission.

A policy area may be defined as a homogeneous grouping of Activities constituting parts of the Commission's work, which are relevant for the decision-making process. Each policy area corresponds, in general, to a DG, and encompassing an average of about 6 or 7 individual activities. Policy areas are mainly operational, since their core activities aim at benefiting a third-party beneficiary within their respective domains of activity. The operational budget is completed with the necessary administrative expenditure for each policy area.

2.5.   INSTITUTIONS AND AGENCIES (Tables 14 to 18)

INSTITUTIONS AND AGENCIES (Tables 14 to 18)

The consolidated reports on the implementation of the general budget of the European Union include, as in previous years, the budget implementation of all Institutions since within the EU budget a separate budget for each Institution is established. Agencies do not have a separate budget inside the EU budget and they are partially financed by a Commission budget subsidy.

In order to provide all relevant budgetary data for the Agencies, the budgetary part of the consolidated annual accounts include separate reports on the implementation of the individual budgets of the traditional agencies consolidated.

---

(1)  The European Parliament has adopted a budget on 15 December 2010 which provides for the payment of the Union's short-term liabilities from own resources to be collected by, or called up from, the Member States in 2011. Additionally, under Article 83 of the Staff Regulations (Council Regulation (EEC) 259/68 of 29 February 1968 as amended), the Member States shall jointly guarantee the liability for pensions.

1

(2)  figures as reported by Member States at 31 March 2011 in SFC 2007

2

(3)  reports have not been sent for 10 programmes and have been requested from the responsible authorities.

3

(4)  with correction coefficient (‘cc’) applied

4

(5)  paid for the first 3 years following departure

5

(6)  Consolidated for the first time in 2010

6

(7)  It should be noted that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to add-up

7

(8)  Of which EFTA amounts total EUR 9 million in 2010 and EUR 11 million in 2009.

8

(9)  including appropriations carried over and assigned revenue

9

(10)  including appropriations carried over and assigned revenue

10

---

| 14.11.2011 | EN | Official Journal of the European Union | C 332/134 |
| --- | --- | --- | --- |

14.11.2011

EN

Official Journal of the European Union

C 332/134

---

THE COURT’S STATEMENT OF ASSURANCE PROVIDED TO THE EUROPEAN PARLIAMENT AND THE COUNCIL — INDEPENDENT AUDITOR’S REPORT

2011/C 332/02

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






  (a) | the annual accounts of the European Union which comprise the consolidated financial statements (1) and the consolidated reports on implementation of the budget (2) for the financial year ended 31 December 2010; and |
| --- | --- | --- |

I.

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

(a)

the annual accounts of the European Union which comprise the consolidated financial statements (1) and the consolidated reports on implementation of the budget (2) for the financial year ended 31 December 2010; and

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

(b)

the legality and regularity of the transactions underlying those accounts.

Management’s responsibility

| II. | In accordance with Articles 310 to 325 of the TFEU and the Financial Regulation, management is responsible for the preparation and fair presentation of the annual accounts of the European Union and the legality and regularity of the transactions underlying them:






  (a) | Management’s responsibility in respect of the annual accounts of the European Union includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, on the basis of the accounting rules adopted by the Commission's accounting officer (3); and making accounting estimates that are reasonable in the circumstances. According to Article 129 of the Financial Regulation, the Commission approves the annual accounts of the European Union after the Commission’s accounting officer has consolidated them on the basis of the information presented by the other institutions and bodies and established a note, accompanying the consolidated accounts, declaring, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the European Union in all material aspects. |
| --- | --- | --- |

II.

In accordance with Articles 310 to 325 of the TFEU and the Financial Regulation, management is responsible for the preparation and fair presentation of the annual accounts of the European Union and the legality and regularity of the transactions underlying them:

(a)

Management’s responsibility in respect of the annual accounts of the European Union includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, on the basis of the accounting rules adopted by the Commission's accounting officer (3); and making accounting estimates that are reasonable in the circumstances. According to Article 129 of the Financial Regulation, the Commission approves the annual accounts of the European Union after the Commission’s accounting officer has consolidated them on the basis of the information presented by the other institutions and bodies and established a note, accompanying the consolidated accounts, declaring, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the European Union in all material aspects.

| (b) | The way in which management exercises its responsibility for ensuring the legality and regularity of underlying transactions depends on the method of implementation of the budget foreseen in the Financial Regulation. Implementation tasks have to comply with the principle of sound financial management, requiring designing, implementing and maintaining effective and efficient internal control including adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Union (Article 317 of the TFEU). |
| --- | --- |

(b)

The way in which management exercises its responsibility for ensuring the legality and regularity of underlying transactions depends on the method of implementation of the budget foreseen in the Financial Regulation. Implementation tasks have to comply with the principle of sound financial management, requiring designing, implementing and maintaining effective and efficient internal control including adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Union (Article 317 of the TFEU).

Auditor’s responsibility

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

III.

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

| IV. | An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts and the legality and the regularity of the transactions underlying them. The procedures are selected based on the auditor's judgment, including an assessment of the risks of material misstatement of the consolidated accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In assessing those risks, the auditor considers internal control relevant to the preparation and fair presentation of the consolidated accounts and supervisory and control systems implemented to ensure legality and regularity of underlying transactions, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated accounts and the annual activity reports. |
| --- | --- |

IV.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts and the legality and the regularity of the transactions underlying them. The procedures are selected based on the auditor's judgment, including an assessment of the risks of material misstatement of the consolidated accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In assessing those risks, the auditor considers internal control relevant to the preparation and fair presentation of the consolidated accounts and supervisory and control systems implemented to ensure legality and regularity of underlying transactions, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated accounts and the annual activity reports.

| V. | In the context of revenue, the Court’s audit of Value Added Tax- and Gross National Income-based own resources takes as its starting point the receipt by the Commission of the macroeconomic aggregates prepared by the member states, and then assesses the Commission's systems for processing the data until they are included in the final accounts and the contributions by the member states have been received. For traditional own resources, the Court examines the accounts of the customs authorities and analyses the flow of duties until the amounts are recorded in the final accounts and received by the Commission. |
| --- | --- |

V.

In the context of revenue, the Court’s audit of Value Added Tax- and Gross National Income-based own resources takes as its starting point the receipt by the Commission of the macroeconomic aggregates prepared by the member states, and then assesses the Commission's systems for processing the data until they are included in the final accounts and the contributions by the member states have been received. For traditional own resources, the Court examines the accounts of the customs authorities and analyses the flow of duties until the amounts are recorded in the final accounts and received by the Commission.

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

VI.

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

Reliability of the accounts

Opinion on the reliability of the accounts

| VII. | In the Court's opinion, the annual accounts of the European Union present fairly, in all material respects, the financial position of the Union 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 the Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

VII.

In the Court's opinion, the annual accounts of the European Union present fairly, in all material respects, the financial position of the Union 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 the Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Emphasis of matter in relation to the reliability of the accounts

| VIII. | Without calling into question the opinion expressed in paragraph VII, the Court draws attention to a change in the Commission’s accounting policy concerning pre-financing payments establishing or contributing to Financial Engineering Instruments which have not yet been used in the form of loans, guarantees or equity investments. This required the Commission to restate the 2009 annual accounts of the European Union on which the Court issued an unmodified opinion (4) (see notes 2.5, 2.9, 2.10 and 3.4 to the 2010 annual accounts of the European Union explaining the adjustments made). |
| --- | --- |

VIII.

Without calling into question the opinion expressed in paragraph VII, the Court draws attention to a change in the Commission’s accounting policy concerning pre-financing payments establishing or contributing to Financial Engineering Instruments which have not yet been used in the form of loans, guarantees or equity investments. This required the Commission to restate the 2009 annual accounts of the European Union on which the Court issued an unmodified opinion (4) (see notes 2.5, 2.9, 2.10 and 3.4 to the 2010 annual accounts of the European Union explaining the adjustments made).

Legality and regularity of the transactions underlying the accounts

Revenue

Opinion on the legality and regularity of revenue underlying the accounts

| IX. | In the Court’s opinion, revenue underlying the accounts for the year ended 31 December 2010 is legal and regular in all material respects. |
| --- | --- |

IX.

In the Court’s opinion, revenue underlying the accounts for the year ended 31 December 2010 is legal and regular in all material respects.

Commitments

Opinion on the legality and regularity of commitments underlying the accounts

| X. | In the Court’s opinion, commitments underlying the accounts for the year ended 31 December 2010 are legal and regular in all material respects. |
| --- | --- |

X.

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

Payments

Basis for adverse opinion on the legality and regularity of payments underlying the accounts

| XI. | The Court concludes that overall the supervisory and control systems are partially effective in ensuring the legality and regularity of payments underlying the accounts. The policy groups Agriculture and Natural Resources and Cohesion, Energy and Transport are materially affected by error. The Court’s estimate for the most likely error rate for payments underlying the accounts is 3,7 %. |
| --- | --- |

XI.

The Court concludes that overall the supervisory and control systems are partially effective in ensuring the legality and regularity of payments underlying the accounts. The policy groups Agriculture and Natural Resources and Cohesion, Energy and Transport are materially affected by error. The Court’s estimate for the most likely error rate for payments underlying the accounts is 3,7 %.

Adverse opinion on the legality and regularity of payments underlying the accounts

| XII. | In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2010 are materially affected by error. |
| --- | --- |

XII.

In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2010 are materially affected by error.

8 September 2011.

Vítor Manuel da SILVA CALDEIRA

President

European Court of Auditors

12, rue Alcide De Gasperi, 1615 Luxembourg

---

(1)  The consolidated financial statements comprise the balance sheet, the economic outturn account, the cash flow table, the statement of changes in net assets and a summary of significant accounting policies and other explanatory notes (including segment reporting).

1

(2)  The consolidated reports on implementation of the budget comprise the consolidated reports on implementation of the budget and a summary of budgetary principles and other explanatory notes.

2

(3)  The accounting rules adopted by the Commission’s accounting officer are derived from International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, in their absence, International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. In accordance with the Financial Regulation, the consolidated financial statements for the 2010 financial year were prepared (as they have been since the 2005 financial year) on the basis of these accounting rules adopted by the Commission’s accounting officer, which adapt accruals based accounting principles to the specific environment of the European Union, while the consolidated reports on implementation of the budget continue to be primarily based on cash movements.

3

(4)  OJ C 303, 9.11.2010, p. 10.

4

---