# C_2009304EN.01003301.xml

| 15.12.2009 | EN | Official Journal of the European Union | C 304/33 |
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15.12.2009

EN

Official Journal of the European Union

C 304/33

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REPORT

REPORT

on the annual accounts of the European Chemicals Agency for the financial year 2008, together with the Agency’s replies

2009/C 304/07

CONTENTS

CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-2 | 34 |
| STATEMENT OF ASSURANCE ... | 3-12 | 34 |
| COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ... | 13-14 | 35 |
| OTHER MATTERS ... | 15 | 35 |
| Table ... | 36 |
| The Agency’s replies ... | 37 |

Paragraph

Paragraph

Page

Page

INTRODUCTION ...

1-2

34

STATEMENT OF ASSURANCE ...

3-12

34

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ...

13-14

35

OTHER MATTERS ...

15

35

Table ...

36

The Agency’s replies ...

The Agency’s replies

37

INTRODUCTION

INTRODUCTION

| 1. | The European Chemicals Agency (hereinafter referred to as ‘the Agency’), located in Helsinki, was set up by Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 (1). Its main tasks are ensure a high level of protection of human health and the environment as well as the free movement of substances, on their own, in preparations and in articles, while enhancing competitiveness and innovation. This Regulation should also promote the development of alternative methods for the assessment of hazards of substances (2). The Agency became financially independent from the Commission on 1 January 2008. |
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1.

The European Chemicals Agency (hereinafter referred to as ‘the Agency’), located in Helsinki, was set up by Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 (1). Its main tasks are ensure a high level of protection of human health and the environment as well as the free movement of substances, on their own, in preparations and in articles, while enhancing competitiveness and innovation. This Regulation should also promote the development of alternative methods for the assessment of hazards of substances (2). The Agency became financially independent from the Commission on 1 January 2008.

1

2

| 2. | The Agency’s 2008 budget amounted to 66,4 million euro.The number of staff employed by the Agency at the end of the year was 244. |
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2.

The Agency’s 2008 budget amounted to 66,4 million euro.The number of staff employed by the Agency at the end of the year was 244.

STATEMENT OF ASSURANCE

STATEMENT OF ASSURANCE

| 3. | Pursuant to the provisions of Article 248 of the Treaty the Court has audited the annual accounts (3) of the Agency, which comprise the ‘financial statements’ (4) and the ‘reports on implementation of the budget’ (5) for the financial year ended 31 December 2008 and the legality and regularity of the transactions underlying those accounts. |
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3.

3.

Pursuant to the provisions of Article 248 of the Treaty the Court has audited the annual accounts (3

4

5

| 4. | This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (6). |
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4.

4.

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

The Director’s responsibility

The Director’s responsibility

| 5. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Agency under his own responsibility and within the limits of authorised appropriations (7). The Director is responsible for putting in place (8) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (9) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
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5.

5.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Agency under his own responsibility and within the limits of authorised appropriations (7

8

9

The Court’s responsibility

The Court’s responsibility

| 6. | The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Agency and the legality and regularity of the transactions underlying them. |
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6.

6.

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

| 7. | The Court conducted its audit in accordance with the IFAC and ISSAI (10) International Auditing Standards and Codes of Ethics. Those standards require that the Court complies with ethical requirements and plans and performs the audit to obtain reasonable assurance about whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular. |
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7.

7.

The Court conducted its audit in accordance with the IFAC and ISSAI (10

| 8. | The Court’s audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and about the legality and regularity of the transactions underlying them. The procedures selected depend on its audit judgement including the assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error. In making those risk assessments internal control relevant to the entity’s preparation and presentation of accounts is considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of accounting policies used and, the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
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8.

8.

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

| 9. | The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
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9.

9.

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

Opinion on the reliability of the accounts

Opinion on the reliability of the accounts

| 10. | In the Court’s opinion, the Agency’s Annual Accounts (11) present fairly, in all material respects, its financial position as of 31 December 2008 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation. |
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10.

10.

In the Court’s opinion, the Agency’s Annual Accounts (11

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

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

| 11. | In the Court’s opinion, the transactions underlying the annual accounts of the Agency for the financial year ended 31 December 2008 are, in all material respects, legal and regular. |
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11.

11.

In the Court’s opinion, the transactions underlying the annual accounts of the Agency for the financial year ended 31 December 2008 are, in all material respects, legal and regular.

| 12. | The comments which follow do not call the Court’s opinions into question. |
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12.

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

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

| 13. | Budgetary payments amounted to 36,4 million euro, 54 % of the amount committed. The operational activities in particular were delayed due to difficulties in implementing the IT system and the lack of qualified staff. Commitment appropriations amounting to 20 million euro were foreseen for operational activities but 8,2 million euro of these were carried forward and 7,5 million euro cancelled. This situation is at odds with the annuality principle and indicates weaknesses in the planning of the Agency’s activities. |
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13.

Budgetary payments amounted to 36,4 million euro, 54 % of the amount committed. The operational activities in particular were delayed due to difficulties in implementing the IT system and the lack of qualified staff. Commitment appropriations amounting to 20 million euro were foreseen for operational activities but 8,2 million euro of these were carried forward and 7,5 million euro cancelled. This situation is at odds with the annuality principle and indicates weaknesses in the planning of the Agency’s activities.

| 14. | For a significant number of transactions, totalling more than 0,4 million euro, the expenditure was not covered by a budget commitment and as such was irregular. Payment appropriations were unduly carried forward to 2009; in most of the cases they were related to activities to be implemented in 2009 (12) and in one case, to an error in the evaluation of a commitment (13). This situation indicates a need for the Agency to improve its procedures for the following-up the use of its appropriations. |
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14.

For a significant number of transactions, totalling more than 0,4 million euro, the expenditure was not covered by a budget commitment and as such was irregular. Payment appropriations were unduly carried forward to 2009; in most of the cases they were related to activities to be implemented in 2009 (12) and in one case, to an error in the evaluation of a commitment (13). This situation indicates a need for the Agency to improve its procedures for the following-up the use of its appropriations.

12

13

OTHER MATTERS

OTHER MATTERS

| 15. | The Agency’s Director appointed himself chairman of the selection board in 14 recruitment procedures. Given his prerogatives as Appointing Authority, the independence (14) of the other members, of these selection boards who are temporary agents subordinated to the Director was not guaranteed. The audit of three procedures showed weaknesses in the documentation summarising the work of the selection boards: in particular, a lack of justification for the decisions taken at the various stages in the selection process. |
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15.

The Agency’s Director appointed himself chairman of the selection board in 14 recruitment procedures. Given his prerogatives as Appointing Authority, the independence (14) of the other members, of these selection boards who are temporary agents subordinated to the Director was not guaranteed. The audit of three procedures showed weaknesses in the documentation summarising the work of the selection boards: in particular, a lack of justification for the decisions taken at the various stages in the selection process.

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This report was adopted by the Court of Auditors in Luxembourg at its meeting of 8 October 2009.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

European Chemicals Agency (Helsinki)

| Areas of Community competence deriving from the Treaty | Competences of the Agency as defined in Regulation (EC) No 1907/2006 (REACH Regulation) and Regulation (EC) No 1272/2008
  (Classification, labelling and packaging of substances and mixtures) | Governance | Resources made available to the Agency in 2008 | Products and services provided during the financial year 2008 |
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| The legal base of ECHA’s founding regulation, the REACH Regulation (EC) No 1907/2006, is

  Article 95 of the EC Treaty. | Objectives

  The purpose of the REACH Regulation is to ensure a high level of protection of human health and the environment, including the promotion of alternative methods for the assessment of the hazards of substances, as well as the free circulation of substances on the internal market, while enhancing competitiveness and innovation.
  The Agency should be central to ensuring that the legislation on chemicals and the decision-making processes and scientific bases underlying it have credibility with all stakeholders and the public. The Agency should also play a pivotal role in coordinating communication around this Regulation and in its implementation. The confidence in the Agency on the part of the Community institutions, the Member States, the general public and interested parties is therefore essential. For this reason, it is vital to ensure its independence and high scientific, technical and regulatory capacities as well as its transparency and efficiency. | Tasks

  ECHA was established for the purpose of managing, and in some cases, carrying out the technical, scientific and administrative aspects of the REACH Regulation and in order to ensure consistency at Community level in relation to these aspects.
  The Agency must also provide the Member States and the Community institutions with the best possible scientific and technical advice on questions relating to the chemicals which fall within its remit and which are referred to it in accordance with the provisions of the REACH Regulation.
  ECHA also has tasks related to the classification and labelling of chemical substances. In particular, the Agency must provide the Member States and Community institutions with the best possible scientific advice and provide industry and Member State authorities with technical and scientific guidance. | 1 -   Management Board


  Composition

  One representative of each Member State appointed by the Council and a maximum of six representatives appointed by the Commission, including three individuals from interested parties without voting rights and, in addition, two independent persons appointed by the European Parliament.

  Task

  Mainly adopting the annual and multi-annual work programme, the final budget, a general report, internal rules of procedures and the appointment of a disciplinary authority over the Executive Director. Also, the appointment of a Board of Appeal and Committee members.

  2 -   Director

  Daily management of the Agency.

  3 -   Other organs: various Committees, the Forum for the Exchange of Information on Enforcement, Secretariat and Board of Appeal


  4 -   External audit

  Court of Auditors.

  5 -   Discharge authority

  Parliament acting on recommendation by the Council. | Budget

  66,4 million euro:
  Community contribution 62,6 million euro.
  Fee income 3,8 million euro.

  Staff at 31 December 2008

  220 posts in the establishment plan
  Number of posts occupied: 210
  Other staff: 34
  Contract agents, seconded national experts and Interims
  Total staff number: 244
  Assigned to the following duties:






  — | 164 operational tasks: |

Areas of Community competence deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 1907/2006 (REACH Regulation) and Regulation (EC) No 1272/2008

(Classification, labelling and packaging of substances and mixtures)

Governance

Resources made available to the Agency in 2008

Products and services provided during the financial year 2008

The legal base of ECHA’s founding regulation, the REACH Regulation (EC) No 1907/2006, is

Article 95 of the EC Treaty.

Objectives

The purpose of the REACH Regulation is to ensure a high level of protection of human health and the environment, including the promotion of alternative methods for the assessment of the hazards of substances, as well as the free circulation of substances on the internal market, while enhancing competitiveness and innovation.

The Agency should be central to ensuring that the legislation on chemicals and the decision-making processes and scientific bases underlying it have credibility with all stakeholders and the public. The Agency should also play a pivotal role in coordinating communication around this Regulation and in its implementation. The confidence in the Agency on the part of the Community institutions, the Member States, the general public and interested parties is therefore essential. For this reason, it is vital to ensure its independence and high scientific, technical and regulatory capacities as well as its transparency and efficiency.

Tasks

ECHA was established for the purpose of managing, and in some cases, carrying out the technical, scientific and administrative aspects of the REACH Regulation and in order to ensure consistency at Community level in relation to these aspects.

The Agency must also provide the Member States and the Community institutions with the best possible scientific and technical advice on questions relating to the chemicals which fall within its remit and which are referred to it in accordance with the provisions of the REACH Regulation.

ECHA also has tasks related to the classification and labelling of chemical substances. In particular, the Agency must provide the Member States and Community institutions with the best possible scientific advice and provide industry and Member State authorities with technical and scientific guidance.

1 -   Management Board

Composition

One representative of each Member State appointed by the Council and a maximum of six representatives appointed by the Commission, including three individuals from interested parties without voting rights and, in addition, two independent persons appointed by the European Parliament.

Task

Mainly adopting the annual and multi-annual work programme, the final budget, a general report, internal rules of procedures and the appointment of a disciplinary authority over the Executive Director. Also, the appointment of a Board of Appeal and Committee members.

2 -   Director

Daily management of the Agency.

3 -   Other organs: various Committees, the Forum for the Exchange of Information on Enforcement, Secretariat and Board of Appeal

4 -   External audit

Court of Auditors.

5 -   Discharge authority

Parliament acting on recommendation by the Council.

Budget

66,4 million euro:

Community contribution 62,6 million euro.

Fee income 3,8 million euro.

Staff at 31 December 2008

220 posts in the establishment plan

Number of posts occupied: 210

Other staff: 34

Contract agents, seconded national experts and Interims

Total staff number: 244

Assigned to the following duties:

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164 operational tasks:

| — | administrative and support tasks: 80 |
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—

administrative and support tasks: 80

Preparations and capacity building as a new Agency in fields of registration, evaluation, authorisations and restrictions, classification and labelling and committees

Development of REACH-IT system and other IT systems

Administrative and management systems build up

Number of pre-registered substances: 150 000; 65 000 companies signed up

Number of dossiers registered: 1 460

Number of questions answered by helpdesk: 12 325

Number of new guidance documents issued: 6

Number of guidance updates issued: 10

Candidate list: 15 substances included.

Source: Information supplied by the Agency.

THE AGENCY’S REPLIES

Ref. point 13:

As for other starting Agencies ECHA’s expenditure planning was difficult and the resulting budget implementation for 2008 by ECHA was suboptimal. For its first year of financial independence, the Management Board agreed to take over the Commission’s estimate for the 2008 budget. These estimates were developed under high levels of uncertainty and were on the safe side. The fast entry into operation (1.6.2008) and the extremely high number of pre-registrations (2,7 million instead of the estimated 132 000) required a concentration of resources on one single activity, affecting expenditure elsewhere. The emphasis in 2009 is on improving the planning and the monitoring of resources.

Ref. point 14:

The Agency agrees with the observation of the Court of Auditors. The end of the year operations of 2008 have been especially challenging due to lack of financial officers in the operational and technical units, which resulted in some cases in insufficient documenting or the inability to fully close all operations by year end. Currently, adequate staff is in place and the financial procedures as well as the internal controls have been revised and consolidated. The end of the year operations in 2009 will receive reinforced attention.

Ref. point 15:

The Director chaired 14 selection boards for management and key positions in the first 3 quarters of 2008, because the management in place at that point in time was acting on an interim basis. The participation of the Director in the selection board was balanced by an external evaluation of the candidates by an independent consultant firm, the inclusion of an observer from the Management Board and the fact that several selection board members were seconded officials from the Commission. For the future, the Agency has decided that the Director will no longer participate in the work of the selection boards. Moreover, guidance is in place to assist the selection boards’ work, in particular the need to motivate decisions taken.

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(1)  OJ L 396, 30.12.2006, p. 1.

1

(2)  The Table summarises the Agency's competences and activities. It is presented for information purposes.

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Table

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

3

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

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

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

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(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 23 December 2002 (OJ L 357, 31.12.2002, p. 72).

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

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(9)  The rules concerning the presentation of the accounts and accounting by the Agencies are laid down in chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Commission Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are integrated as such in the Financial Regulation of the Agency.

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

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(11)  The Final Annual Accounts were drawn up on 15 June 2009 and received by the Court on 29 June 2009. The Final Annual Accounts, consolidated with those of the Commission are published in the Official Journal of the European Union by 15 November of the following year. These can be found on the following website http://eca.europa.eu or http://echa.europa.eu/publications/annual_accounts_en.asp

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Official Journal of the European Union

(12)  Four cases of a total approximate value of 576 000 euro.

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(13)  Value 100 000 euro.

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(14)  Article 11 bis of the Staff Regulations.

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