# C_2009304EN.01008901.xml

| 15.12.2009 | EN | Official Journal of the European Union | C 304/89 |
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15.12.2009

EN

Official Journal of the European Union

C 304/89

---

REPORT

REPORT

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

2009/C 304/17

CONTENTS

CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-2 | 90 |
| STATEMENT OF ASSURANCE ... | 3-12 | 90 |
| COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ... | 13 | 91 |
| OTHER MATTERS ... | 14-17 | 91 |
| Table ... | 92 |
| The Agency’s replies... | 94 |

Paragraph

Paragraph

Page

Page

INTRODUCTION ...

1-2

90

STATEMENT OF ASSURANCE ...

3-12

90

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ...

13

91

OTHER MATTERS ...

14-17

91

Table ...

92

The Agency’s replies...

The Agency’s replies

94

INTRODUCTION

INTRODUCTION

| 1. | The European Railway Agency (hereinafter ‘the Agency’), located in Lille-Valenciennes, was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 April 2004 (1). The Agency’s aim is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety (2). |
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1.

The European Railway Agency (hereinafter ‘the Agency’), located in Lille-Valenciennes, was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 April 2004 (1). The Agency’s aim is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety (2).

1

2

| 2. | The Agency’s 2008 budget amounted to 18 million euro compared with 16,6 million euro the previous year. The number of staff employed by the Agency at the end of the year was 113 compared with 99 the previous year. |
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2.

The Agency’s 2008 budget amounted to 18 million euro compared with 16,6 million euro the previous year. The number of staff employed by the Agency at the end of the year was 113 compared with 99 the previous year.

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. | More than 4,1 million euro appropriations were carried forward to 2009 (12). The audit of a sample of the largest commitments for which the related appropriations have been carried forward to 2009 showed that they concerned services and works (13) which were ordered very late in 2008 and were expected to be delivered in 2009. This high level of appropriations carried forward indicates difficulties in the programming and the budgeting of the Agency’s activities. |
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13.

More than 4,1 million euro appropriations were carried forward to 2009 (12). The audit of a sample of the largest commitments for which the related appropriations have been carried forward to 2009 showed that they concerned services and works (13) which were ordered very late in 2008 and were expected to be delivered in 2009. This high level of appropriations carried forward indicates difficulties in the programming and the budgeting of the Agency’s activities.

12

13

OTHER MATTERS

OTHER MATTERS

| 14. | The review of the Agency’s Annual Work programme showed several shortcomings. Objectives are not always formulated in a ‘SMART’ (specific, measurable, achievable, relevant, timely) way but rather in a way which does not allow the identification of shortfalls against objectives and the assessment of achievements. Inconsistencies in the presentation of figures pertaining to staff and budgetary resources allocated to activities were also noted. This situation, combined with the absence of performance indicators, hampers an assessment of the annual performance of the Agency. |
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14.

The review of the Agency’s Annual Work programme showed several shortcomings. Objectives are not always formulated in a ‘SMART’ (specific, measurable, achievable, relevant, timely) way but rather in a way which does not allow the identification of shortfalls against objectives and the assessment of achievements. Inconsistencies in the presentation of figures pertaining to staff and budgetary resources allocated to activities were also noted. This situation, combined with the absence of performance indicators, hampers an assessment of the annual performance of the Agency.

| 15. | An audit of a sample of procurement procedures carried out during the year showed weaknesses. The formal requirements set out in the tender specifications were not respected and not consistently assessed by the evaluation committees; at the level of selection criteria (two cases) (14) and at the level of award criteria (one case) (15). This hampered the transparency of the procedures. |
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15.

An audit of a sample of procurement procedures carried out during the year showed weaknesses. The formal requirements set out in the tender specifications were not respected and not consistently assessed by the evaluation committees; at the level of selection criteria (two cases) (14) and at the level of award criteria (one case) (15). This hampered the transparency of the procedures.

14

15

| 16. | The Agency is still carrying out its operations in two locations: Lille and Valenciennes. As the Court mentioned in its report for the financial year 2006 (16), this situation exposes the Agency to significant additional costs (17) which could be avoided if all operations were concentrated in one location. Since then, the Agency has taken steps to formalise a seat agreement whereby the additionnal costs emerging from the dual location would be compensated by the French authorities. These efforts have so far been unsuccessful. |
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16.

The Agency is still carrying out its operations in two locations: Lille and Valenciennes. As the Court mentioned in its report for the financial year 2006 (16), this situation exposes the Agency to significant additional costs (17) which could be avoided if all operations were concentrated in one location. Since then, the Agency has taken steps to formalise a seat agreement whereby the additionnal costs emerging from the dual location would be compensated by the French authorities. These efforts have so far been unsuccessful.

16

17

| 17. | In 2009, the Agency will move to a building owned by the municipality of Valenciennes. The duration of the contract is 25 years, provided that a seat agreement is signed with the French Government. Because no seat agreement has been formalised to date, the budgetary authority (18) has limited the duration of the new lease contract to one year, automatically renewable for a maximum of one further year. The lack of certainty on the duration of the contract hinders the planning for the installation of the new premises and the related acquisition procedures and, in consequence, the budgetary programming. |
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17.

In 2009, the Agency will move to a building owned by the municipality of Valenciennes. The duration of the contract is 25 years, provided that a seat agreement is signed with the French Government. Because no seat agreement has been formalised to date, the budgetary authority (18) has limited the duration of the new lease contract to one year, automatically renewable for a maximum of one further year. The lack of certainty on the duration of the contract hinders the planning for the installation of the new premises and the related acquisition procedures and, in consequence, the budgetary programming.

18

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 Railway Agency (Lille/Valenciennes)

| Areas of Community competence deriving from the Treaty | Competences of the Agency as defined in Regulation (EC) No 881/2004 of the European Parliament and of the Council | Governance | Resources available to the Agency in 2008
  (Data for 2007) | Activities and services provided in 2008 |
| --- | --- | --- | --- | --- |
| Common Transport Policy
  For the purpose of implementing Article 70, and taking into account the distinctive features of transport, the Council shall, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:






  (a) | common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States; |

Areas of Community competence deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 881/2004 of the European Parliament and of the Council

Governance

Resources available to the Agency in 2008

(Data for 2007)

Activities and services provided in 2008

Common Transport Policy

For the purpose of implementing Article 70, and taking into account the distinctive features of transport, the Council shall, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:

(a)

common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States;

| (b) | the conditions under which non-resident carriers may operate transport services within a Member State; |
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(b)

the conditions under which non-resident carriers may operate transport services within a Member State;

| (c) | measures to improve transport safety; |
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(c)

measures to improve transport safety;

| (d) | any other appropriate provisions. |
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(d)

any other appropriate provisions.

(Article 71 of the Treaty)

Objectives

To contribute on technical matters, to the implementation of the Community legislation aimed at:

| — | improving the competitive position of the railway systems, |
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—

improving the competitive position of the railway systems,

| — | developing a common approach to safety on the European railway system. |
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—

developing a common approach to safety on the European railway system.

In order to contribute to creating a European railway area without frontiers and guaranteeing a high level of safety.

Tasks

1 —   Address recommendations to the Commission on

| — | the common safety methods (CMS) and common safety targets (CSTs) provided in the Railway Safety Directive (2004/49/EC), |
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—

the common safety methods (CMS) and common safety targets (CSTs) provided in the Railway Safety Directive (2004/49/EC),

| — | safety certificates and measures in the field of safety, |
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—

safety certificates and measures in the field of safety,

| — | development of technical specifications for interoperability, |
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—

development of technical specifications for interoperability,

| — | monitoring interoperability, |
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—

monitoring interoperability,

| — | certification of maintenance workshops, |
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—

certification of maintenance workshops,

| — | vocational competencies, |
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—

vocational competencies,

| — | registration of rolling stock. |
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—

registration of rolling stock.

2 —   Issue opinions on

| — | national safety rules, |
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—

national safety rules,

| — | monitoring the quality of work of notified bodies, |
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—

monitoring the quality of work of notified bodies,

| — | interoperability of the trans-European network. |
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—

interoperability of the trans-European network.

3 —   Coordination of national bodies

| — | coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21). |
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—

coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21).

4 —   Publications and databases

| — | report on safety performance (every two years), |
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—

report on safety performance (every two years),

| — | report on progress with interoperability (every two years), |
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—

report on progress with interoperability (every two years),

| — | public database of safety documents, |
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—

public database of safety documents,

| — | public register of documents on interoperability. |
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—

public register of documents on interoperability.

1 —   Administrative Board

Comprises one representative from each Member State, four representatives from the Commission and six representatives, without the right to vote, from the professional sectors concerned.

2 —   Director

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

3 —   External audit

Court of Auditors.

4 —   Discharge Authority

The Parliament following a recommendation from the Council.

Budget

18 million euro

(16,6 million euro)

Staff at 31 December 2008

Posts listed in the establishment plan: 116 (116)

Posts occupied on 31.12.2008: 106 (95)

Other staff: 7 (4)

Total staff: 113 (99)

of which assigned to:

| — | operational tasks: 69 (66) |
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—

operational tasks: 69 (66)

| — | administrative tasks: 44 (33) |
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—

administrative tasks: 44 (33)

| — | Recommendation on common safety methods to be used in the framework of common safety targets, |
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—

Recommendation on common safety methods to be used in the framework of common safety targets,

| — | Recommendation on the revision of Annex I to Directive 2004/49/EC, |
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—

Recommendation on the revision of Annex I to Directive 2004/49/EC,

| — | The first biennial report on the safety performance of the railways of the European Union, |
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—

The first biennial report on the safety performance of the railways of the European Union,

| — | Recommendation on a common format for train drivers licences and registers, |
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—

Recommendation on a common format for train drivers licences and registers,

| — | Recommendation on harmonised requirements for Part B Safety Certificates, |
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—

Recommendation on harmonised requirements for Part B Safety Certificates,

| — | Recommendation on the conventional rail technical specifications for interoperability (TSI) infrastructure, |
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—

Recommendation on the conventional rail technical specifications for interoperability (TSI) infrastructure,

| — | Recommendation on the conventional rail TSI energy, |
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—

Recommendation on the conventional rail TSI energy,

| — | Recommendation on the certification of maintenance workshops, |
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—

Recommendation on the certification of maintenance workshops,

| — | Recommendation on the system requirement specification for baseline 3 of the European Railway Traffic Management System (ERTMS) specification, |
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—

Recommendation on the system requirement specification for baseline 3 of the European Railway Traffic Management System (ERTMS) specification,

| — | Draft TSI on locomotives and passenger rolling stock, |
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—

Draft TSI on locomotives and passenger rolling stock,

| — | First draft of the recommendation on Section 1 of Annex VII of Directive 2008/57/EC (cross acceptance checklist), |
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—

First draft of the recommendation on Section 1 of Annex VII of Directive 2008/57/EC (cross acceptance checklist),

| — | Intermediate report on the TSI telematic applications for passengers, |
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—

Intermediate report on the TSI telematic applications for passengers,

| — | Feasibility study on the interoperability of the 1 520 mm rail system; |
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—

Feasibility study on the interoperability of the 1 520 mm rail system;

| — | Evaluation of the notification of the lists of national technical rules, |
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—

Evaluation of the notification of the lists of national technical rules,

| — | Draft report on the way national safety rules are published and made available, |
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—

Draft report on the way national safety rules are published and made available,

| — | Draft report on impact assessment and recommendations concerning the requirement for derailment detection proposed by the Committee on dangerous goods, |
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—

Draft report on impact assessment and recommendations concerning the requirement for derailment detection proposed by the Committee on dangerous goods,

| — | Setting-up of the register of documents on interoperability, |
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—

Setting-up of the register of documents on interoperability,

| — | Biennial safety conference. |
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—

Biennial safety conference.

Source: Information supplied by the Agency.

THE AGENCY’S REPLIES

| 13. | Out of the 4,1 million euro appropriations carried over from 2008 to 2009, more than 1,5 million concern contracts signed in the last two months of 2008. The late signatures are a consequence of delays in the procurement procedures and of the transfers made at the end of October 2008 following an analysis of the budget execution. The other 2,6 million concern ongoing contracts for which the invoices were not yet received and provisional commitments covering costs in relation to staff missions and experts. The Agency will continue to make efforts to improve the planning of the procurement procedures and the monitoring of the budget execution throughout in the year. |
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13.

Out of the 4,1 million euro appropriations carried over from 2008 to 2009, more than 1,5 million concern contracts signed in the last two months of 2008. The late signatures are a consequence of delays in the procurement procedures and of the transfers made at the end of October 2008 following an analysis of the budget execution. The other 2,6 million concern ongoing contracts for which the invoices were not yet received and provisional commitments covering costs in relation to staff missions and experts. The Agency will continue to make efforts to improve the planning of the procurement procedures and the monitoring of the budget execution throughout in the year.

| 14. | As of the budget procedure 2010, ERA has introduced a process whereby the preparation of the annual budget and work programme are fully integrated so as to ensure a maximum of consistency. Furthermore ERA will endeavour to be increasingly precise in the definition of the objectives, activities and their timetable.
  From 2009 on, any significant change in priorities are reported to the Administrative Board and reflected in a proposal to amend the work programme accordingly. Moreover, from 2009, DG TREN has asked ERA and the other agencies within its domain to define performance indicators and to report on them regularly. |
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14.

As of the budget procedure 2010, ERA has introduced a process whereby the preparation of the annual budget and work programme are fully integrated so as to ensure a maximum of consistency. Furthermore ERA will endeavour to be increasingly precise in the definition of the objectives, activities and their timetable.

From 2009 on, any significant change in priorities are reported to the Administrative Board and reflected in a proposal to amend the work programme accordingly. Moreover, from 2009, DG TREN has asked ERA and the other agencies within its domain to define performance indicators and to report on them regularly.

| 15. | Based on an analysis of past difficulties encountered in the area of procurement, an action plan has been set up. The actions include inter alia training and assistance to the members of the evaluation committees and harmonisation of the way tenders are evaluated using check-lists. |
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15.

Based on an analysis of past difficulties encountered in the area of procurement, an action plan has been set up. The actions include inter alia training and assistance to the members of the evaluation committees and harmonisation of the way tenders are evaluated using check-lists.

| 16. | The Agency makes all possible efforts to conclude a Seat Agreement with the Host State. However, so far no formal reaction to ERA’s proposal for an agreement has been received. |
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16.

The Agency makes all possible efforts to conclude a Seat Agreement with the Host State. However, so far no formal reaction to ERA’s proposal for an agreement has been received.

| 17. | See answer to paragraph 16. As long as the seat agreement is not signed, the Agency agrees that it will face important problems with its procurement procedures, in particular with those related to the building in Valenciennes. |
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17.

See answer to paragraph 16. As long as the seat agreement is not signed, the Agency agrees that it will face important problems with its procurement procedures, in particular with those related to the building in Valenciennes.

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(1)  OJ L 220, 21.6.2004, p. 3.

1

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

2

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.

4

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

5

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

6

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

7

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

8

(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.

9

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

10

(11)  The Final Annual Accounts were drawn up on 26 June 2009 and received by the Court on 2 July 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 www.era.europa.eu

11

Official Journal of the European Union

(12)  About 3,9 million euro of appropriations carried forward to 2009 concern administrative and operational expenditure. This represents 57 % of the annual budget of 6,9 million euro for Title II and Title III Appropriations.

12

(13)  These concern inter alia contracted studies, IT-related expenditure and furnishing of premises.

13

(14)  Total value: 334 000 euro.

14

(15)  Value: 800 000 euro over 4 years.

15

(16)  Paragraph 8 (OJ C 309, 19.12.2007, p. 68).

16

(17)  In 2006, these additional costs were estimated at more than 400 000 euro.

17

(18)  Letter from the Chairman of the Parliament Committee on Budgets to the President of the Agency’s Administrative Board dated 26 November 2008, ref D(2008) 67307.

18

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