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| 28.12.2005 | EN | Official Journal of the European Union | C 332/1 |
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28.12.2005

EN

Official Journal of the European Union

C 332/1

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REPORT

REPORT

on the annual accounts of the European Aviation Safety Agency for the financial year 2004 together with the Agency's replies

(2005/C 332/01)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | THE COURT'S OPINION |
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3-6

| 7-11 | OBSERVATIONS |
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7-11

Tables 1 to 4

The Agency's replies

The Agency's replies

INTRODUCTION

| 1. | The European Aviation Safety Agency (hereinafter called the Agency) was established by Regulation (EC) No 1592/2002 of the European Parliament and of the Council of 15 July 2002 (1). The financial year 2004 was the second in which the Agency actually carried out its operating activities. The Agency's tasks are to maintain a high level of civil aviation safety, to ensure the proper functioning and development of civil aviation safety, to establish certification specifications and to provide certification of aeronautical products. Table 1 summarises the competences and activities of the Agency on the basis of information supplied by it. |
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1.

The European Aviation Safety Agency (hereinafter called the Agency) was established by Regulation (EC) No 1592/2002 of the European Parliament and of the Council of 15 July 2002 (1). The financial year 2004 was the second in which the Agency actually carried out its operating activities. The Agency's tasks are to maintain a high level of civil aviation safety, to ensure the proper functioning and development of civil aviation safety, to establish certification specifications and to provide certification of aeronautical products. Table 1 summarises the competences and activities of the Agency on the basis of information supplied by it.

1

Table 1

| 2. | For information, the annual accounts drawn up by the Agency for the financial year 2004 are presented in summary form in Tables 2, 3 and 4. |
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2.

For information, the annual accounts drawn up by the Agency for the financial year 2004 are presented in summary form in Tables 2, 3 and 4.

Tables 2, 3 and 4

THE COURT'S OPINION

| 3. | The Court's opinion 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. |
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3.

The Court's opinion 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 2004 (3) were drawn up by its Executive Director, pursuant to Article 49 of Regulation (EC) No 1592/2002, and sent to the Court, which is required to give its opinion on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Agency's accounts for the financial year ended 31 December 2004 (3) were drawn up by its Executive Director, pursuant to Article 49 of Regulation (EC) No 1592/2002, and sent to the Court, which is required to give its opinion 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. |
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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 obtained a reasonable basis for the opinion expressed below. |
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6.

The Court has obtained a reasonable basis for the opinion expressed below.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2004 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 opinion into question.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2004 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 opinion into question.

OBSERVATIONS

| 7. | Contrary to the budgetary principle of specificity, the Agency's initial budget and its amending budgets, as published in the Official Journal, do not give a breakdown of appropriations in terms of articles and items, as required by Article 23 of the Agency's financial regulation. |
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7.

Contrary to the budgetary principle of specificity, the Agency's initial budget and its amending budgets, as published in the Official Journal, do not give a breakdown of appropriations in terms of articles and items, as required by Article 23 of the Agency's financial regulation.

| 8. | The revenue and expenditure account for the financial year 2003 showed a loss (4) of 214 000 euro. In accordance with the provisions of the Agency's financial regulation, this outturn ought to have been entered in an amending budget for 2004 (5). |
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8.

The revenue and expenditure account for the financial year 2003 showed a loss (4) of 214 000 euro. In accordance with the provisions of the Agency's financial regulation, this outturn ought to have been entered in an amending budget for 2004 (5).

4

5

| 9. | The budgetary management suffers from a number of anomalies: a lack of any indication in the amending budgets about the transfers carried out or even of any reasons for these transfers, failure to inform the Management Board about the transfers, and payment of advances outside the budget. |
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9.

The budgetary management suffers from a number of anomalies: a lack of any indication in the amending budgets about the transfers carried out or even of any reasons for these transfers, failure to inform the Management Board about the transfers, and payment of advances outside the budget.

| 10. | The Agency has not yet adopted the implementing rules for its financial regulation. Neither has it carried out any risk analysis or prepared any internal control standards. |
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10.

The Agency has not yet adopted the implementing rules for its financial regulation. Neither has it carried out any risk analysis or prepared any internal control standards.

| 11. | The staff selection procedures are not laid down formally and vary from one selection to another without any apparent reason. In order to improve the transparency of the decisions taken in this regard, the Agency needs to formalise its recruitment procedures and make them more consistent. |
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11.

The staff selection procedures are not laid down formally and vary from one selection to another without any apparent reason. In order to improve the transparency of the decisions taken in this regard, the Agency needs to formalise its recruitment procedures and make them more consistent.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 October 2005.

For the Court of Auditors

Hubert WEBER

President

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(1)  OJ L 240, 7.9.2002, p. 1.

1

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

2

(3)  These accounts were drawn up on 23 August 2005 and received by the Court on 19 September 2005.

3

(4)  This loss was due to carry-overs of appropriations that were not covered by the budgetary revenue received.

4

(5)  Article 16(2) of the Agency's financial regulation.

5

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Table 1

European Aviation Safety Agency (Cologne)

| Areas of Community competence deriving from the Treaty | Competences of the Agency as defined in Regulation (EC) No 1592/2002 of the Parliament and of the Council of 15 July 2002 | Governance | Resources made available to the Agency

  (2003 data) | Products and services |
| --- | --- | --- | --- | --- |
| Common transport policy | Objectives: | Tasks: | 1. | The Management Board, consisting of one representative of each Member State and one representative of the Commission, sets up an advisory body of interested parties. |

Areas of Community competence deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 1592/2002 of the Parliament and of the Council of 15 July 2002

Governance

Resources made available to the Agency

(2003 data)

Products and services

Common transport policy

Objectives:

Tasks:

1.

The Management Board, consisting of one representative of each Member State and one representative of the Commission, sets up an advisory body of interested parties.

| 2. | The Executive Director manages the Agency; is appointed by the Management Board on a proposal from the Commission. |
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2.

The Executive Director manages the Agency; is appointed by the Management Board on a proposal from the Commission.

| 3. | The Board of Appeal rules on the Agency's decisions concerning certification, fees and charges and checks made on undertakings. |
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3.

The Board of Appeal rules on the Agency's decisions concerning certification, fees and charges and checks made on undertakings.

| 4. | The Scientific Committee and scientific groups supply the scientific opinions of the Agency. |
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4.

The Scientific Committee and scientific groups supply the scientific opinions of the Agency.

| 5. | External control: European Court of Auditors. |
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5.

External control: European Court of Auditors.

| 6. | Discharge given by the Parliament on a recommendation from the Council. |
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6.

Discharge given by the Parliament on a recommendation from the Council.

Final budget:

Opinions:

‘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)

To maintain a high uniform level of civil aviation safety in Europe and to ensure the proper functioning and development of civil aviation safety.

| 1. | to issue opinions addressed to the Commission; |
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1.

to issue opinions addressed to the Commission;

| 2. | to issue certification specifications, including airworthiness codes and acceptable means of compliance, and any guidance material for the application of Community policy; |
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2.

to issue certification specifications, including airworthiness codes and acceptable means of compliance, and any guidance material for the application of Community policy;

| 3. | to take decisions regarding airworthiness and environmental certification; |
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3.

to take decisions regarding airworthiness and environmental certification;

| 4. | to conduct standardisation inspections at the competent authorities of the Member States; |
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4.

to conduct standardisation inspections at the competent authorities of the Member States;

| 5. | to conduct the necessary investigations in undertakings. |
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5.

to conduct the necessary investigations in undertakings.

Total budget: 11,3 million euro (4,8 million euro)

Community contribution: 11,1 million euro (98 %) (4,8 million euro)

Contribution of the Federal Republic of Germany: 0,2 million euro (2 %).

Staff numbers as at 31 December 2004:

95 posts in the establishment plan (80)

posts occupied: 84 (1)

+ 18 other posts (16).

Total staff numbers: 102 (17)

assigned to the following tasks:

| — | operational: 36 (1) |
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—

operational: 36 (1)

| — | administrative: 30 (4) |
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—

administrative: 30 (4)

| — | mixed: 36 (12). |
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—

mixed: 36 (12).

| — | 3 opinions concerning amendments to Regulations (EC) Nos 1592/2002, 1702/2003 and 2042/2003; |
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—

3 opinions concerning amendments to Regulations (EC) Nos 1592/2002, 1702/2003 and 2042/2003;

| — | 2 opinions relating to derogations issued by Member States. |
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—

2 opinions relating to derogations issued by Member States.

Rulemaking decisions:

1 amendment to Agency certification specifications.

International cooperation:

5 cooperation agreements made with Brazil, China, Canada, Israel and the Aeronautical Committee of the Commonwealth of Independent States.

Certification decisions:

Type certificates: 35

Supplementary type certificates: 576

Airworthiness directives: 442

European Technical Specifications: 257

Acceptable means of compliance: 86

Major changes: 1 378

Minor changes: 4 472

Major repairs: 320

Minor repairs: 3 252

AFM/RFM (= Flight Manual Revisions): 741

Approval of design organisations: 84

Approval of maintenance organisations (bilateral): 1 559

Approval of maintenance organisations (foreign): 180

Approval of maintenance training organisations: 13

Approval of manufacturing organisations: 1

Source: Information supplied by the Agency.

Table 2

European Aviation Safety Agency — Implementation of the budget for the financial year 2004

| (1000 euro) |
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| Revenue | Expenditure |
| Origin 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 available
  (2004 budget and financial year 2003) |
| entered | committed | paid | carried over | cancelled | outstanding commitments | paid | cancelled | appropriations | committed | paid | carried over | cancelled |
| Community subsidies | 11 050 | 11 050 | Title I
  Staff | 7 807 | 6 000 | 5 686 | 314 | 1 807 | 30 | 12 | 18 | 7 837 | 6 030 | 5 698 | 314 | 1 825 |
| Other contributions | 287 | 248 | Title II
  Administration | 2 539 | 2 060 | 1 250 | 810 | 479 | 396 | 379 | 17 | 2 935 | 2 456 | 1 629 | 810 | 496 |
| | | | Title III
  Operating activities | 991 | 937 | 673 | 264 | 54 | 2 486 | 1 330 | 1 156 | 3 477 | 3 423 | 2 003 | 264 | 1 210 |
| Total | 11 337 | 11 298 | Total | 11 337 | 8 997 | 7 609 | 1 388 | 2 340 | 2 912 | 1 721 | 1 191 | 14 249 | 11 909 | 9 330 | 1 388 | 3 531 |
| Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts. |

(1000 euro)

Revenue

Expenditure

Origin 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 available

(2004 budget and financial year 2003)

entered

committed

paid

carried over

cancelled

outstanding commitments

paid

cancelled

appropriations

committed

paid

carried over

cancelled

Community subsidies

11 050

11 050

Title I

Staff

7 807

6 000

5 686

314

1 807

30

12

18

7 837

6 030

5 698

314

1 825

Other contributions

287

248

Title II

Administration

2 539

2 060

1 250

810

479

396

379

17

2 935

2 456

1 629

810

496

Title III

Operating activities

991

937

673

264

54

2 486

1 330

1 156

3 477

3 423

2 003

264

1 210

Total

11 337

11 298

Total

11 337

8 997

7 609

1 388

2 340

2 912

1 721

1 191

14 249

11 909

9 330

1 388

3 531

Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

Table 3

European Aviation Safety Agency — Revenue and expenditure account for the financial years 2004 and 2003 (1)

| (1000 euro) |
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| | 2004 | 2003 |
| Operating revenue |
| Community subsidies | 7 777 | 3 725 |
| Other subsidies | 248 | 0 |
| Reimbursement of expenditure | 3 | 0 |
| Other revenue | 350 | 0 |
| Total (a) | 8 378 | 3 725 |
| Operating expenditure |
| Staff | 5 556 | 662 |
| Buildings and related expenditure | 689 | 92 |
| Other administrative expenditure | 743 | 82 |
| Allocation to provisions | 89 | 1 |
| Operating expenditure | 2 081 | 261 |
| Total (b) | 9 158 | 1 098 |
| Operating outturn (c = a – b) | – 780 | 2 627 |
| Financial income (d) | 0 | 0 |
| Financial expenses (e) | 2 | 0 |
| Financial outturn (f = d – e) | –2 | 0 |
| Outturn for the financial year (g = c + f) | – 782 | 2 627 |
| Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts. |

(1000 euro)

2004

2003

Operating revenue

Community subsidies

7 777

3 725

Other subsidies

248

0

Reimbursement of expenditure

3

0

Other revenue

350

0

Total (a)

8 378

3 725

Operating expenditure

Staff

5 556

662

Buildings and related expenditure

689

92

Other administrative expenditure

743

82

Allocation to provisions

89

1

Operating expenditure

2 081

261

Total (b)

9 158

1 098

Operating outturn (c = a – b)

– 780

2 627

Financial income (d)

0

0

Financial expenses (e)

2

0

Financial outturn (f = d – e)

–2

0

Outturn for the financial year (g = c + f)

– 782

2 627

Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

Table 4

European Aviation Safety Agency — Balance sheet as at 31 December 2004 and 31 December 2003 (2)

| (1000 euro) |
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| Assets | 2004 | 2003 | Liabilities | 2004 | 2003 |
| Intangible assets | 69 | 27 | Own capital | | |
| Tangible assets | | | Outturns carried over from previous financial years | 2 627 | 0 |
| | | | Outturn for the financial year | – 782 | 2 627 |
| Computer equipment | 376 | 12 | Subtotal | 1 845 | 2 627 |
| Furniture and vehicles | 285 | 0 | Current liabilities | | |
| Other fittings and equipment | 261 | 0 | Current accounts payable | 549 | 112 |
| Subtotal | 922 | 12 | Sundry accounts payable | 61 | 6 |
| Current assets | | | Amounts owed to Community institutions and bodies | 3 843 | 32 |
| Prefinancing | 70 | 0 | Subtotal | 4 453 | 150 |
| Sundry accounts receivable | 171 | 5 | | | |
| Other accounts receivable | 68 | 5 | | | |
| Amounts owed by Community institutions and bodies | 20 | 1 | | | |
| Subtotal | 329 | 11 | | | |
| Liquid assets | 4 978 | 2 727 | | | |
| Total | 6 298 | 2 777 | Total | 6 298 | 2 777 |
| Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts. |

(1000 euro)

Assets

2004

2003

Liabilities

2004

2003

Intangible assets

69

27

Own capital

Tangible assets

Outturns carried over from previous financial years

2 627

0

Outturn for the financial year

– 782

2 627

Computer equipment

376

12

Subtotal

1 845

2 627

Furniture and vehicles

285

0

Current liabilities

Other fittings and equipment

261

0

Current accounts payable

549

112

Subtotal

922

12

Sundry accounts payable

61

6

Current assets

Amounts owed to Community institutions and bodies

3 843

32

Prefinancing

70

0

Subtotal

4 453

150

Sundry accounts receivable

171

5

Other accounts receivable

68

5

Amounts owed by Community institutions and bodies

20

1

Subtotal

329

11

Liquid assets

4 978

2 727

Total

6 298

2 777

Total

6 298

2 777

Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

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(1)  The data for the financial year 2003 have been restated to make them comparable, following the transition to accruals-based accounting.

Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

(2)  The data for the financial year 2003 have been restated to make them comparable, following the transition to accruals-based accounting.

Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

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THE AGENCY'S REPLIES

| 7. | The Agency has taken into account the Court's observation. The budget for the financial year 2005 and the preliminary draft budget for 2006 were adopted with the breakdown required by the regulations. |
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7.

The Agency has taken into account the Court's observation. The budget for the financial year 2005 and the preliminary draft budget for 2006 were adopted with the breakdown required by the regulations.

| 8. | The Agency has taken into account the loss recorded in 2003 in the revenue and expenditure account for the financial year 2004. As the outturn recorded in 2004 was positive, it ought not to have to be entered in an amending budget. |
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8.

The Agency has taken into account the loss recorded in 2003 in the revenue and expenditure account for the financial year 2004. As the outturn recorded in 2004 was positive, it ought not to have to be entered in an amending budget.

| 9. | All decisions on transfers in the financial year 2004 were reasoned, with the exception of the first two. The Agency has taken the necessary steps to avoid the situations described by the Court from recurring. |
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9.

All decisions on transfers in the financial year 2004 were reasoned, with the exception of the first two. The Agency has taken the necessary steps to avoid the situations described by the Court from recurring.

| 10. | The implementing rules for the Agency's financial regulation were adopted by its Management Board on 14 June 2005. A risk manager/internal auditor, whose main task shall be to carry out risk analysis and prepare internal control standards, is being recruited. |
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10.

The implementing rules for the Agency's financial regulation were adopted by its Management Board on 14 June 2005. A risk manager/internal auditor, whose main task shall be to carry out risk analysis and prepare internal control standards, is being recruited.

| 11. | The Agency will endeavour to improve the transparency of its recruitment procedures, in particular by drawing up manuals of procedure. |
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11.

The Agency will endeavour to improve the transparency of its recruitment procedures, in particular by drawing up manuals of procedure.

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