# C_2006312EN.01003001.xml

| 19.12.2006 | EN | Official Journal of the European Union | C 312/30 |
| --- | --- | --- | --- |

19.12.2006

EN

Official Journal of the European Union

C 312/30

---

REPORT

REPORT

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

(2006/C 312/06)

CONTENTS

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

1-2

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

3-6

| 7-12 | OBSERVATIONS |
| --- | --- |

7-12

Tables 1 to 4

The Agency's replies

The Agency's replies

INTRODUCTION

| 1. | The European Maritime Safety Agency (hereinafter called the Agency) was set up by Regulation (EC) No 1406/2002 of the European Parliament and of the Council of 27 June 2002 (1). The Agency's tasks are to ensure a high level of maritime safety and prevention of pollution by ships, to provide the Commission and the Member States with technical assistance, to monitor the implementation of Community legislation and to evaluate its effectiveness. |
| --- | --- |

1.

The European Maritime Safety Agency (hereinafter called the Agency) was set up by Regulation (EC) No 1406/2002 of the European Parliament and of the Council of 27 June 2002 (1). The Agency's tasks are to ensure a high level of maritime safety and prevention of pollution by ships, to provide the Commission and the Member States with technical assistance, to monitor the implementation of Community legislation and to evaluate its effectiveness.

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 of 25 June 2002 (2); it was drawn up following an examination of the Agency's accounts, as required by Article 248 of the Treaty establishing the European Community. |
| --- | --- |

3.

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

2

| 4. | The Agency's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Executive Director, pursuant to Article 18 of Regulation (EC) No 1406/2002, and sent to the Court, which is required to give a Statement of Assurance as to their reliability and 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 18 of Regulation (EC) No 1406/2002, and sent to the Court, which is required to give a Statement of Assurance as to their reliability and 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 expressed below: |
| --- | --- |

6.

The Court has thus obtained a reasonable basis for the Statement expressed 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. | The implementation of the budget for the financial year 2005 was affected by delays observed in staff recruitment, as shown by the commitment rate of less than two-thirds of the budgeted appropriations under Title I (staff expenditure). This situation had repercussions on the utilisation of appropriations for administrative expenditure (Title II, with two-thirds of appropriations committed) and, in particular, on the utilisation of appropriations for operating activities (Title III), with a payment rate of only 33 %. |
| --- | --- |

7.

The implementation of the budget for the financial year 2005 was affected by delays observed in staff recruitment, as shown by the commitment rate of less than two-thirds of the budgeted appropriations under Title I (staff expenditure). This situation had repercussions on the utilisation of appropriations for administrative expenditure (Title II, with two-thirds of appropriations committed) and, in particular, on the utilisation of appropriations for operating activities (Title III), with a payment rate of only 33 %.

| 8. | The Court notes that activity-based management has not been brought in, even though the Agency's financial regulation made provision for its introduction, on the model that was applied to the general budget with a view to better monitoring of performance. In this context, achieving the Agency's aims should not mean merely carrying out a set of tasks. It should rather be assessed in terms of contribution to the goals laid down in the Agency's basic Regulation. The Agency's work programme should, in principle, express this contribution in operational and measurable terms. |
| --- | --- |

8.

The Court notes that activity-based management has not been brought in, even though the Agency's financial regulation made provision for its introduction, on the model that was applied to the general budget with a view to better monitoring of performance. In this context, achieving the Agency's aims should not mean merely carrying out a set of tasks. It should rather be assessed in terms of contribution to the goals laid down in the Agency's basic Regulation. The Agency's work programme should, in principle, express this contribution in operational and measurable terms.

| 9. | The computerised accounting system for the general accounts allows direct changes to be made to accounting records without corrective journal entries. This situation involves significant risks from the point of view of the integrity of the accounts and should be rectified as soon as possible. Moreover, the register of liabilities to be entered in the balance sheet should be checked more carefully: they are actually overestimated by at least 92 000 euro (i.e. almost 10 % of current liabilities) corresponding to goods and services not yet received at 31 December 2005. |
| --- | --- |

9.

The computerised accounting system for the general accounts allows direct changes to be made to accounting records without corrective journal entries. This situation involves significant risks from the point of view of the integrity of the accounts and should be rectified as soon as possible. Moreover, the register of liabilities to be entered in the balance sheet should be checked more carefully: they are actually overestimated by at least 92 000 euro (i.e. almost 10 % of current liabilities) corresponding to goods and services not yet received at 31 December 2005.

| 10. | The documentation of transactions, a prerequisite for a valid system of internal control, shows some weaknesses. Files which relate to commitments and payments are often incomplete or confused, which makes transactions difficult to trace. It is also difficult to monitor contracts entered into by the Agency. Information is dispersed across several lists. It is difficult to ascertain the total number of contracts concluded during the financial year and the number of contracts in progress. The system of control must be tightened up, beginning with the adoption of minimum standards for administrative and control procedures, including the nature and organisation of data. |
| --- | --- |

10.

The documentation of transactions, a prerequisite for a valid system of internal control, shows some weaknesses. Files which relate to commitments and payments are often incomplete or confused, which makes transactions difficult to trace. It is also difficult to monitor contracts entered into by the Agency. Information is dispersed across several lists. It is difficult to ascertain the total number of contracts concluded during the financial year and the number of contracts in progress. The system of control must be tightened up, beginning with the adoption of minimum standards for administrative and control procedures, including the nature and organisation of data.

| 11. | Contract clauses which provide for pre-financing are not standardised with regard to the provision of bank guarantees. Thus, for four contracts for approximately equivalent sums, a guarantee was required in two cases but not in the other two. In two cases, moreover, the advance payments provided for were made, although the guarantees were invalid. |
| --- | --- |

11.

Contract clauses which provide for pre-financing are not standardised with regard to the provision of bank guarantees. Thus, for four contracts for approximately equivalent sums, a guarantee was required in two cases but not in the other two. In two cases, moreover, the advance payments provided for were made, although the guarantees were invalid.

| 12. | There are various shortcomings in the management of public procurement. For one contract made up of several lots, the composition of the tender evaluation committee did not comply with the regulatory requirements (4). In addition, the file concerning the awarding of one lot contained incomplete documentation (5). |
| --- | --- |

12.

There are various shortcomings in the management of public procurement. For one contract made up of several lots, the composition of the tender evaluation committee did not comply with the regulatory requirements (4). In addition, the file concerning the awarding of one lot contained incomplete documentation (5).

4

5

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 208, 5.8.2002, p. 1.

1

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

2

(3)  These accounts were drawn up on 16 June 2006 and received by the Court on 3 July 2006.

3

(4)  The tender evaluation committee consisted of members of the same unit, although the applicable provisions laid down that at least two organisational entities should be represented on tender evaluation committees.

4

(5)  In respect of lot 3, the enterprise chosen had not submitted documentary evidence of its technical capacity to carry out the required tasks.

5

---

Table 1

European Maritime Safety Agency (temporary headquarters in Brussels, planned relocation to Lisbon)

| Areas of Community competence deriving from the Treaty | Competence of the Agency as defined in Regulation (EC) No 1406/2002 of the European Parliament and of the Council of 27 June 2002 as amended by Regulations (EC) No 1644/2003 of 22 July 2003 and No 724/2004 of 31 March 2004 | Governance | Resources made available to the Agency

  (2004) | Products and services supplied
  2005 |
| --- | --- | --- | --- | --- |
| Common transport policy

  ‘The Council may, acting by a qualified majority, decide whether, to what extent and by what procedure appropriate provisions may be laid down for sea and air transport.’

  (Article 80 of the Treaty) | Objectives:







  — | to ensure a high, uniform and effective level of maritime safety and prevention of pollution by ships, |

Areas of Community competence deriving from the Treaty

Competence of the Agency as defined in Regulation (EC) No 1406/2002 of the European Parliament and of the Council of 27 June 2002 as amended by Regulations (EC) No 1644/2003 of 22 July 2003 and No 724/2004 of 31 March 2004

Governance

Resources made available to the Agency

(2004)

Products and services supplied

2005

Common transport policy

‘The Council may, acting by a qualified majority, decide whether, to what extent and by what procedure appropriate provisions may be laid down for sea and air transport.’

(Article 80 of the Treaty)

Objectives:

—

to ensure a high, uniform and effective level of maritime safety and prevention of pollution by ships,

| — | to provide the Member States and the Commission with technical and scientific assistance, |
| --- | --- |

—

to provide the Member States and the Commission with technical and scientific assistance,

| — | to monitor the implementation of Community legislation in this field and to evaluate the effectiveness of the measures in place, |
| --- | --- |

—

to monitor the implementation of Community legislation in this field and to evaluate the effectiveness of the measures in place,

| — | to introduce operational methods for combating pollution in European waters. |
| --- | --- |

—

to introduce operational methods for combating pollution in European waters.

Tasks:

| — | to assist the Commission in drawing up Community legislation and in its implementation, |
| --- | --- |

—

to assist the Commission in drawing up Community legislation and in its implementation,

| — | to monitor the overall functioning of the Community port State control regime, which may include visits to the Member States, |
| --- | --- |

—

to monitor the overall functioning of the Community port State control regime, which may include visits to the Member States,

| — | to provide the Commission with technical assistance for the port State control of ships, |
| --- | --- |

—

to provide the Commission with technical assistance for the port State control of ships,

| — | to work with the Member States on developing technical solutions and to provide technical assistance related to the implementation of Community legislation, |
| --- | --- |

—

to work with the Member States on developing technical solutions and to provide technical assistance related to the implementation of Community legislation,

| — | to promote cooperation between riparian States in the shipping areas concerned, |
| --- | --- |

—

to promote cooperation between riparian States in the shipping areas concerned,

| — | to develop and operate any information system necessary, |
| --- | --- |

—

to develop and operate any information system necessary,

| — | to facilitate cooperation between the Member States and the Commission in the development of a common methodology for investigating maritime accidents, |
| --- | --- |

—

to facilitate cooperation between the Member States and the Commission in the development of a common methodology for investigating maritime accidents,

| — | to provide the Commission and the Member States with reliable information on maritime safety and on pollution by ships, |
| --- | --- |

—

to provide the Commission and the Member States with reliable information on maritime safety and on pollution by ships,

| — | to assist the Commission and the Member States in the identification and pursuit of ships making unlawful discharges, |
| --- | --- |

—

to assist the Commission and the Member States in the identification and pursuit of ships making unlawful discharges,

| — | to monitor the classification societies recognised by the EU and to issue the corresponding reports to the Commission, |
| --- | --- |

—

to monitor the classification societies recognised by the EU and to issue the corresponding reports to the Commission,

| — | to assist the Commission with the input for and implementation of tasks relating to the Directive on marine equipment, |
| --- | --- |

—

to assist the Commission with the input for and implementation of tasks relating to the Directive on marine equipment,

| — | to provide the Commission with data on the introduction of the Directive on ship waste reception facilities in European ports. |
| --- | --- |

—

to provide the Commission with data on the introduction of the Directive on ship waste reception facilities in European ports.

1. Administrative Board

Composition

One representative per Member State, four representatives of the Commission, four representatives, without the right to vote, from the professional sectors concerned.

Tasks

| — | to adopt the budget and the work programme, |
| --- | --- |

—

to adopt the budget and the work programme,

| — | to examine requests from Member States for assistance. |
| --- | --- |

—

to examine requests from Member States for assistance.

2. Executive Director

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

3. External audit

Court of Auditors.

4. Discharge Authority

Parliament on a recommendation from the Council.

Final budget for 2005:

35,3 million euro (13,3 million euro)

Community contribution: 100 % (100 %)

Total staff at 31 December 2005:

95 (55) posts in the establishment plan

No of posts occupied: 80 (34)

+20 (9) other posts (auxiliary contracts, seconded national experts, local staff, employment-agency staff)

Total staff numbers: 100 (43)

assigned to the following duties:

| — | operational tasks: 65 (27) |
| --- | --- |

—

operational tasks: 65 (27)

| — | administrative tasks: 27 (13) |
| --- | --- |

—

administrative tasks: 27 (13)

| — | mixed tasks: 8 (3) |
| --- | --- |

—

mixed tasks: 8 (3)

Number of specifications and guideline documents: 29

Inspections/Audits: 40

Investigations: 10

Seminars: 22

Source: Information supplied by the Agency.

EUROPEAN MARITIME SAFETY AGENCY

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

Table 2

Implementation of the budget for the financial year 2005

| (1000 euro) |
| --- |
| Revenue | Expenditure |
| Origin of revenue | Revenue entered in the final budget for the financial year | Revenue received | Allocation of expenditure | Final budget appropriations for the financial year | Available appropriations
  (appropriations for the financial year plus appropriations carried over from the previous financial year) | Available appropriations
  (appropriations for the financial year and 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 | 35 360 | 16 060 | Title I
  Staff (NDA) | 9 788 | 6 224 | 6 063 | 161 | 3 564 | 143 | 62 | 81 | 9 931 | 6 366 | 6 124 | 161 | 3 645 |
| Other revenue | 0 | 8 | Title II
  Administration (NDA) | 2 898 | 1 939 | 1 598 | 333 | 967 | 684 | 640 | 44 | 3 582 | 2 623 | 2 237 | 333 | 1 011 |
| | | | Title III
  Operating activities (DA) | | | | | | | | | | | | | |
| — CA | 22 674 | 21 551 | 0 | 0 | 1 124 | | | | 22 674 | 21 551 | 0 | 0 | 1 124 |
| — PA | 22 674 | 0 | 7 515 | 0 | 15 159 | | | | 22 674 | 0 | 7 515 | 0 | 15 159 |
| Total | 35 360 | 16 068 | Total CA | 35 360 | 29 714 | 0 | 494 | 5 655 | 827 | 702 | 125 | 36 187 | 30 540 | | 494 | 5 780 |
| Total PA | 35 360 | 0 | 15 176 | 494 | 19 690 | 827 | 702 | 125 | 36 187 | | 15 876 | 494 | 19 815 |
| NDA | : | non-differentiated appropriations (commitment appropriations equal payment appropriations). |
| DA | : | differentiated appropriations (commitment and payment appropriations may differ). |
| CA | : | commitment appropriations in a system of differentiated appropriations. |
| PA | : | payment appropriations in a system of differentiated appropriations. |

(1000 euro)

Revenue

Expenditure

Origin of revenue

Revenue entered in the final budget for the financial year

Revenue received

Allocation of expenditure

Final budget appropriations for the financial year

Available appropriations

(appropriations for the financial year plus appropriations carried over from the previous financial year)

Available appropriations

(appropriations for the financial year and 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

35 360

16 060

Title I

Staff (NDA)

9 788

6 224

6 063

161

3 564

143

62

81

9 931

6 366

6 124

161

3 645

Other revenue

0

8

Title II

Administration (NDA)

2 898

1 939

1 598

333

967

684

640

44

3 582

2 623

2 237

333

1 011

Title III

Operating activities (DA)

— CA

22 674

21 551

0

0

1 124

22 674

21 551

0

0

1 124

— PA

22 674

0

7 515

0

15 159

22 674

0

7 515

0

15 159

Total

35 360

16 068

Total CA

35 360

29 714

0

494

5 655

827

702

125

36 187

30 540

494

5 780

Total PA

35 360

0

15 176

494

19 690

827

702

125

36 187

15 876

494

19 815

NDA

:

non-differentiated appropriations (commitment appropriations equal payment appropriations).

DA

:

differentiated appropriations (commitment and payment appropriations may differ).

CA

:

commitment appropriations in a system of differentiated appropriations.

PA

:

payment appropriations in a system of differentiated appropriations.

Table 3

Revenue and expenditure account for the financial year 2005 (1)

| (1000 euro) |
| --- |
| | 2005 |
| Operating revenue |
| Community subsidies | 15 656 |
| Total (a) | 15 656 |
| Operating expenditure |
| Staff | 6 099 |
| Administration | 2 194 |
| Operating activities | 2 925 |
| Total (b) | 11 218 |
| Operating result (c = a — b) | 4 438 |
| Other income (d) | 0 |
| Other charges (e) | 3 |
| Economic result (f = c + d — e) | 4 435 |

(1000 euro)

2005

Operating revenue

Community subsidies

15 656

Total (a)

15 656

Operating expenditure

Staff

6 099

Administration

2 194

Operating activities

2 925

Total (b)

11 218

Operating result (c = a — b)

4 438

Other income (d)

0

Other charges (e)

3

Economic result (f = c + d — e)

4 435

Table 4

Balance sheet at 31 December 2005 and 31 December 2004 (2)

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Assets |
| Fixed assets | 524 | 206 |
| Receivables | 5 456 | 138 |
| Cash accounts | 8 866 | 9 754 |
| Total | 14 846 | 10 098 |
| Liabilities |
| Accumulated surplus | 2 750 | 0 |
| Economic result for the year | 4 435 | 2 750 |
| Current liabilities | 7 661 | 7 348 |
| Total | 14 846 | 10 098 |

(1000 euro)

2005

2004

Assets

Fixed assets

524

206

Receivables

5 456

138

Cash accounts

8 866

9 754

Total

14 846

10 098

Liabilities

Accumulated surplus

2 750

0

Economic result for the year

4 435

2 750

Current liabilities

7 661

7 348

Total

14 846

10 098

---

(1)  The data for the financial year 2004 have not been presented since they are not comparable with the 2005 data because of the change in the accounting methods applied.

(2)  The data for the financial year 2004 have been restated to make them comparable with the 2005 data.

---

THE AGENCY'S REPLIES

| 7. | The implementation of the budget for the financial year 2005 did suffer from delays in recruitment. A recruitment plan has been established in order to prevent similar delays in 2006. For Titles II and III the payment rates should be higher in 2006, especially for anti-pollution for which contracts have already been signed and payments scheduled. |
| --- | --- |

7.

The implementation of the budget for the financial year 2005 did suffer from delays in recruitment. A recruitment plan has been established in order to prevent similar delays in 2006. For Titles II and III the payment rates should be higher in 2006, especially for anti-pollution for which contracts have already been signed and payments scheduled.

| 8. | An activity-based budget management document was presented at the Agency's Administrative Board meeting in June 2006. This document describes the different activities of the Agency and relates them to the corresponding budgets. This initial activity-based management approach will be refined during the second half of 2006. |
| --- | --- |

8.

An activity-based budget management document was presented at the Agency's Administrative Board meeting in June 2006. This document describes the different activities of the Agency and relates them to the corresponding budgets. This initial activity-based management approach will be refined during the second half of 2006.

| 9. | Since April 2006, the Agency has been using ABAC, the Commission's accounting system, which does not allow accounting records to be changed without corrective journal entries. Following the Court's observation, particular attention will be given to the register of liabilities to be entered into the balance sheet within the framework of the procedure for processing the automatic carry-overs for 2006-2007. |
| --- | --- |

9.

Since April 2006, the Agency has been using ABAC, the Commission's accounting system, which does not allow accounting records to be changed without corrective journal entries. Following the Court's observation, particular attention will be given to the register of liabilities to be entered into the balance sheet within the framework of the procedure for processing the automatic carry-overs for 2006-2007.

| 10. | Following an observation by the Court, the Agency's financial service has revised the control lists, in particular in the field of commitments, payments and the award of contracts. A control list of the supporting documents to be included in a contract award file will be made available to the staff concerned. The database concerning the monitoring of contracts concluded by the Agency will be updated as soon as possible. These various actions should result in a strengthening of internal control. |
| --- | --- |

10.

Following an observation by the Court, the Agency's financial service has revised the control lists, in particular in the field of commitments, payments and the award of contracts. A control list of the supporting documents to be included in a contract award file will be made available to the staff concerned. The database concerning the monitoring of contracts concluded by the Agency will be updated as soon as possible. These various actions should result in a strengthening of internal control.

| 11. | Following an observation by the Court, harmonisation of the processing of advance payments and associated guarantees will be introduced. New contract models are being used in order to prevent guarantees received from no longer being valid when payments are modified. |
| --- | --- |

11.

Following an observation by the Court, harmonisation of the processing of advance payments and associated guarantees will be introduced. New contract models are being used in order to prevent guarantees received from no longer being valid when payments are modified.

| 12. | The call for tenders for anti-pollution services was highly complex and had involved five committees composed of 24 experts from the Agency. Because of the specificity of this contract, it was impossible to include external experts, who were replaced by independent observers in the final evaluation committee. It is true that one company selected had not provided a list of similar projects which it had carried out, but this request was only conditional. The technical committee made a substantive error in stating that the company did not fulfil the requirements. This error was corrected at the final stage by the evaluation and selection committee, however the reasons for this correction were not included in the file. |
| --- | --- |

12.

The call for tenders for anti-pollution services was highly complex and had involved five committees composed of 24 experts from the Agency. Because of the specificity of this contract, it was impossible to include external experts, who were replaced by independent observers in the final evaluation committee. It is true that one company selected had not provided a list of similar projects which it had carried out, but this request was only conditional. The technical committee made a substantive error in stating that the company did not fulfil the requirements. This error was corrected at the final stage by the evaluation and selection committee, however the reasons for this correction were not included in the file.

---