# C_2006312EN.01001201.xml

| 19.12.2006 | EN | Official Journal of the European Union | C 312/12 |
| --- | --- | --- | --- |

19.12.2006

EN

Official Journal of the European Union

C 312/12

---

REPORT

REPORT

on the annual accounts of the European Medicines Agency for the financial year 2005 together with the Agency's replies

(2006/C 312/03)

CONTENTS

| 1-2 | INTRODUCTION |
| --- | --- |

1-2

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

3-6

| 7-11 | OBSERVATIONS |
| --- | --- |

7-11

Tables 1 to 4

The Agency's replies

The Agency's replies

INTRODUCTION

| 1. | The European Medicines Agency (hereinafter the Agency) was created by Council Regulation (EEC) No 2309/93 of 22 July 1993, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use. |
| --- | --- |

1.

The European Medicines Agency (hereinafter the Agency) was created by Council Regulation (EEC) No 2309/93 of 22 July 1993, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use.

1

| 2. | Table 1 summarises the Agency's competences and activities. Key information from the financial statements drawn up by the Agency for the financial year 2005 is presented in Tables 2, 3 and 4. |
| --- | --- |

2.

Table 1 summarises the Agency's competences and activities. Key information from the financial statements drawn up by the Agency for the financial year 2005 is presented in Tables 2, 3 and 4.

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

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

3.

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

2

| 4. | The Agency's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Executive Director, pursuant to Article 68 of Regulation (EC) No 726/2004, and sent to the Court, which is required to give a Statement of Assurance on their reliability and on the legality and regularity of the underlying transactions. |
| --- | --- |

4.

The Agency's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Executive Director, pursuant to Article 68 of Regulation (EC) No 726/2004, and sent to the Court, which is required to give a Statement of Assurance on their reliability and on the legality and regularity of the underlying transactions.

3

| 5. | The Court conducted an audit in accordance with its policies and standards, which are based on international auditing standards that have been adapted to the Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and the underlying transactions are legal and regular. |
| --- | --- |

5.

The Court conducted an audit in accordance with its policies and standards, which are based on international auditing standards that have been adapted to the Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and the underlying transactions are legal and regular.

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

6.

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

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2005 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court’s statement into question.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2005 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court’s statement into question.

OBSERVATIONS

| 7. | As regards the implementation of the budget, the utilisation rates for commitment appropriations (94 %) and payment appropriations (82 %) were on the whole high. For administrative expenditure (Title II), however, the utilisation rate for commitment appropriations was less than 90 %, and more than 40 % of the commitments made were carried over to the following financial year. |
| --- | --- |

7.

As regards the implementation of the budget, the utilisation rates for commitment appropriations (94 %) and payment appropriations (82 %) were on the whole high. For administrative expenditure (Title II), however, the utilisation rate for commitment appropriations was less than 90 %, and more than 40 % of the commitments made were carried over to the following financial year.

| 8. | The access rights to the computer system did not always correspond to the delegations in force. In 2005, a member of staff, who had had no delegation since 2004, still had the corresponding access rights to the computer system. |
| --- | --- |

8.

The access rights to the computer system did not always correspond to the delegations in force. In 2005, a member of staff, who had had no delegation since 2004, still had the corresponding access rights to the computer system.

| 9. | From the end of 2004, the Agency has managed funds (4) collected from other Agencies and bodies to finance a common support service to develop their financial management information systems. Up to 2005, these funds were not presented in the Agency's annual accounts, as was the case with other Agencies which managed the funds in earlier years following a rotational system. |
| --- | --- |

9.

From the end of 2004, the Agency has managed funds (4) collected from other Agencies and bodies to finance a common support service to develop their financial management information systems. Up to 2005, these funds were not presented in the Agency's annual accounts, as was the case with other Agencies which managed the funds in earlier years following a rotational system.

4

| 10. | Anomalies were found in the course of checks on the award of contracts, especially as regards IT contracts. There were no formal decisions concerning the appointment of evaluation committees. The rules governing the hierarchical independence of committee members were not observed. Evaluation committee meetings were held in the absence of some of the members, without any formal justification for their absence. |
| --- | --- |

10.

Anomalies were found in the course of checks on the award of contracts, especially as regards IT contracts. There were no formal decisions concerning the appointment of evaluation committees. The rules governing the hierarchical independence of committee members were not observed. Evaluation committee meetings were held in the absence of some of the members, without any formal justification for their absence.

| 11. | The Court again notes that the contracts concluded with the banks have been in force for over six years even though the detailed rules for the implementation of the Agency's financial regulation lay down that there should be a new call for tenders at least once every five years. |
| --- | --- |

11.

The Court again notes that the contracts concluded with the banks have been in force for over six years even though the detailed rules for the implementation of the Agency's financial regulation lay down that there should be a new call for tenders at least once every five years.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 28 September 2006.

For the Court of Auditors

Hubert WEBER

President

---

(1)  OJ L 214, 24.8.1993, p. 18 and OJ L 136, 30.4.2004, p. 1. Pursuant to the latter Regulation the Agency's original name, the European Agency for the Evaluation of Medicinal Products, was changed to European Medicines Agency.

1

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

2

(3)  These accounts were drawn up on 27 June 2006 and received by the Court on 27 July 2006.

3

(4)  Approximately 400 000 euro.

4

---

Table 1

European Medicines Agency (London)

| Areas of Community competence deriving from the Treaty | Competences of the Agency
  Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 | Governance | Resources made available to the Agency in 2005 (2004) | Products and Services in 2005 (2004) |
| --- | --- | --- | --- | --- |
| A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities.
  Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases and obviating sources of danger to human health. (...)

  (Article 152 of the Treaty) | Objectives:







  — | to coordinate the scientific resources that the Member States' authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use, |

Areas of Community competence deriving from the Treaty

Competences of the Agency

Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004

Governance

Resources made available to the Agency in 2005 (2004)

Products and Services in 2005 (2004)

A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities.

Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases and obviating sources of danger to human health. (...)

(Article 152 of the Treaty)

Objectives:

—

to coordinate the scientific resources that the Member States' authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use,

| — | to provide the Member States and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use. |
| --- | --- |

—

to provide the Member States and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use.

Tasks:

| — | to coordinate the scientific evaluation of medicinal products which are subject to Community marketing authorisation procedures, |
| --- | --- |

—

to coordinate the scientific evaluation of medicinal products which are subject to Community marketing authorisation procedures,

| — | to coordinate the supervision of medicinal products which have been authorised within the Community; (pharmacovigilance), |
| --- | --- |

—

to coordinate the supervision of medicinal products which have been authorised within the Community; (pharmacovigilance),

| — | to advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin, |
| --- | --- |

—

to advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin,

| — | to coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice, |
| --- | --- |

—

to coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice,

| — | to record the status of marketing authorisations granted for medicinal products. |
| --- | --- |

—

to record the status of marketing authorisations granted for medicinal products.

1. The Committee for Medicinal Products for Human Use, consisting of one member and one alternate from each Member State, advises on any question relating to the evaluation of medicinal products for human use.

2. The Committee for Medicinal Products for Veterinary Use, consisting of one member and one alternate from each Member State, advises on any question relating to the evaluation of veterinary medicinal products.

3. The Committee for Orphan Medicinal Products, consisting of one member and one alternate from each Member State, advises on any question relating to the evaluation of orphan medicinal products.

4. The Committee on Herbal Medicinal Products, consisting of one member and one alternate from each Member State, advises on any question relating to the evaluation of herbal medicinal products.

5. The Management Board consisting of one member and one alternate from each Member State, two representatives of the Commission, two representatives appointed by the European Parliament, two representatives from patients organisations, one representative from doctors organisations and one representative from veterinarians organisations. The Board adopts the work programme and the annual report.

6. The Executive Director is appointed by the Management Board on a proposal from the Commission.

7. External audit: European Court of Auditors and Internal Audit Service.

8. Discharge authority: Parliament on a recommendation from the Council.

Final budget for 2005:

111,8 million euro (99,4 million euro)

Community contribution (excluding subsidy for orphan medicines): 22,7 % (24,7 %)

Staff numbers at 31 December 2005:

379 (314) posts provided for in the establishment plan

Posts occupied: 337,5 (290)

+34 (50) other posts (auxiliary contracts, seconded national experts, local staff, employment agency staff)

Total staff: 371,5 (340)

Assigned to the following duties:

| | Operational: 302,5 (271) |
| --- | --- |

Operational: 302,5 (271)

| | Administrative: 69 (69) |
| --- | --- |

Administrative: 69 (69)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 43 (51) |
| --- | --- |

—

Applications for marketing authorisations: 43 (51)

| — | Favourable opinions: 24 (34) |
| --- | --- |

—

Favourable opinions: 24 (34)

| — | Average evaluation time: 203 days (187 days) |
| --- | --- |

—

Average evaluation time: 203 days (187 days)

| — | Opinions after authorisation: 1 148 (926) |
| --- | --- |

—

Opinions after authorisation: 1 148 (926)

| — | Pharmacovigilance: 91 565 reports (64 186 reports) |
| --- | --- |

—

Pharmacovigilance: 91 565 reports (64 186 reports)

| — | Periodic reliability reports: 279 (253) |
| --- | --- |

—

Periodic reliability reports: 279 (253)

| — | Scientific opinions: 135 (77) |
| --- | --- |

—

Scientific opinions: 135 (77)

| — | Procedures for mutual recognition: 8 451 (7 081) |
| --- | --- |

—

Procedures for mutual recognition: 8 451 (7 081)

Medicinal Products for Veterinary Use

| — | New applications: 11 (8) |
| --- | --- |

—

New applications: 11 (8)

| — | Applications in respect of variants: 70 (40) |
| --- | --- |

—

Applications in respect of variants: 70 (40)

| — | Inspections: 114 (93) |
| --- | --- |

—

Inspections: 114 (93)

Orphan Medicinal Products

| — | Applications: 118 (108) |
| --- | --- |

—

Applications: 118 (108)

| — | Favourable opinions: 88 (75) |
| --- | --- |

—

Favourable opinions: 88 (75)

Source: Information supplied by the Agency.

EUROPEAN MEDICINES AGENCY

Source: Agency data — These tables summarise the data supplied by the Agency in its annual accounts.

Table 2

Implementation of the budget for the financial year 2005

| (1000 euro) |
| --- |
| Revenue | Expenditure |
| Source of revenue | Revenue entered in the final budget for the financial year | Revenue collected | Allocation of expenditure | Final budget appropriations | Appropriations carried over from the previous financial year | Appropriations for the financial year plus appropriations carried over from the previous financial year |
| entered | committed | paid | carried over | cancelled | available | paid | cancelled | available | committed | paid | carried over | cancelled |
| Community subsidies (1) | 31 180 | 33 734 | Title I
  Staff | 41 356 | 39 307 | 38 608 | 700 | 2 048 | 642 | 536 | 106 | 41 998 | 39 949 | 39 144 | 700 | 2 154 |
| Own revenue | 77 455 | 71 895 | Title II
  Administration | 27 105 | 24 047 | 15 974 | 10 041 | 1 090 | 10 935 | 10 590 | 345 | 38 040 | 34 982 | 26 564 | 10 041 | 1 435 |
| Other revenue | 3 200 | 3 767 | Title III
  Operating activities | 43 374 | 42 000 | 33 907 | 8 092 | 1 375 | 11 174 | 10 523 | 651 | 54 548 | 53 174 | 44 430 | 8 092 | 2 026 |
| Total | 111 835 | 109 396 | Total | 111 835 | 105 354 | 88 489 | 18 833 | 4 513 | 22 751 | 21 649 | 1 102 | 134 586 | 128 105 | 110 138 | 18 833 | 5 615 |

(1000 euro)

Revenue

Expenditure

Source of revenue

Revenue entered in the final budget for the financial year

Revenue collected

Allocation of expenditure

Final budget appropriations

Appropriations carried over from the previous financial year

Appropriations for the financial year plus appropriations carried over from the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

available

committed

paid

carried over

cancelled

Community subsidies (1)

31 180

33 734

Title I

Staff

41 356

39 307

38 608

700

2 048

642

536

106

41 998

39 949

39 144

700

2 154

Own revenue

77 455

71 895

Title II

Administration

27 105

24 047

15 974

10 041

1 090

10 935

10 590

345

38 040

34 982

26 564

10 041

1 435

Other revenue

3 200

3 767

Title III

Operating activities

43 374

42 000

33 907

8 092

1 375

11 174

10 523

651

54 548

53 174

44 430

8 092

2 026

Total

111 835

109 396

Total

111 835

105 354

88 489

18 833

4 513

22 751

21 649

1 102

134 586

128 105

110 138

18 833

5 615

Table 3

Revenue and expenditure account for the financial years 2005 and 2004

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Operating revenue |
| Community subsidies | 28 957 | 24 556 |
| Revenue | 77 679 | 71 857 |
| Total (a) | 106 636 | 96 413 |
| Operating expenditure |
| Staff | 40 057 | 34 333 |
| Administration | 22 459 | 15 154 |
| Operating activities | 41 999 | 38 573 |
| Total (b) | 104 515 | 88 060 |
| Operating result (c = a — b) | 2 121 | 8 353 |
| Other income (d) | 2 257 | 1 160 |
| Other charges (e) | 0 | 0 |
| Economic result (f = c + d — e) | 4 378 | 9 513 |

(1000 euro)

2005

2004

Operating revenue

Community subsidies

28 957

24 556

Revenue

77 679

71 857

Total (a)

106 636

96 413

Operating expenditure

Staff

40 057

34 333

Administration

22 459

15 154

Operating activities

41 999

38 573

Total (b)

104 515

88 060

Operating result (c = a — b)

2 121

8 353

Other income (d)

2 257

1 160

Other charges (e)

0

0

Economic result (f = c + d — e)

4 378

9 513

Table 4

Balance sheet at 31 December 2005 and 2004

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Assets |
| Fixed assets | 17 437 | 12 115 |
| Receivables | 5 490 | 5 892 |
| Cash accounts | 29 934 | 35 010 |
| Total | 52 861 | 53 017 |
| Liabilities |
| Results accumulated from previous financial years | 23 280 | 13 767 |
| Economic result for the year | 4 378 | 9 513 |
| Current liabilities | 25 203 | 29 737 |
| Total | 52 861 | 53 017 |

(1000 euro)

2005

2004

Assets

Fixed assets

17 437

12 115

Receivables

5 490

5 892

Cash accounts

29 934

35 010

Total

52 861

53 017

Liabilities

Results accumulated from previous financial years

23 280

13 767

Economic result for the year

4 378

9 513

Current liabilities

25 203

29 737

Total

52 861

53 017

---

(1)  Including subsidies received from the European Economic Area.

---

THE AGENCY'S REPLIES

| 7. | The high carry-over 2004-2005 on Title 2 is mainly due to the Telematics expenditure programme, which accounts for 80 % of the carry-overs. The Telematics carry-overs were high because this programme comprises a number of large and complex multi-annual projects covering the whole EU that stretched from 2004 through into 2005. |
| --- | --- |

7.

The high carry-over 2004-2005 on Title 2 is mainly due to the Telematics expenditure programme, which accounts for 80 % of the carry-overs. The Telematics carry-overs were high because this programme comprises a number of large and complex multi-annual projects covering the whole EU that stretched from 2004 through into 2005.

| 8. | Security access has been rectified and all delegated authorising officers were instructed that they must take care to sign the right transaction (in SI2) based on the delegation decision and that they must act with due diligence in this regard. |
| --- | --- |

8.

Security access has been rectified and all delegated authorising officers were instructed that they must take care to sign the right transaction (in SI2) based on the delegation decision and that they must act with due diligence in this regard.

| 9. | The CSS expenditure for 2006 will be included in the EMEA budget with the first Amending Budget and the costs will be charged to the members. Disclosure of the CSS activities in 2005 has been made in note 4 of the EMEA 2005 Accounts. |
| --- | --- |

9.

The CSS expenditure for 2006 will be included in the EMEA budget with the first Amending Budget and the costs will be charged to the members. Disclosure of the CSS activities in 2005 has been made in note 4 of the EMEA 2005 Accounts.

| 10. | The composition of evaluation committees, often made up of more than three persons, is based on the principle that bids should be evaluated by persons both independent and with appropriate expertise. In any case, a minimum of three persons participate to the meetings and the minutes for each meeting are distributed for discussion and approval. In the future, the Agency will request that minutes include a justification in case of absence of a member. |
| --- | --- |

10.

The composition of evaluation committees, often made up of more than three persons, is based on the principle that bids should be evaluated by persons both independent and with appropriate expertise. In any case, a minimum of three persons participate to the meetings and the minutes for each meeting are distributed for discussion and approval. In the future, the Agency will request that minutes include a justification in case of absence of a member.

| 11. | In 2006, the Agency has launched a tender for banking services. The delay mentioned by the Court is due to the fact that over the last years, the financial system of the Agency has been overhauled and it would have been too disruptive to implement a change of bank. |
| --- | --- |

11.

In 2006, the Agency has launched a tender for banking services. The delay mentioned by the Court is due to the fact that over the last years, the financial system of the Agency has been overhauled and it would have been too disruptive to implement a change of bank.

---