# C_2010338EN.01009001.xml

| 14.12.2010 | EN | Official Journal of the European Union | C 338/90 |
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14.12.2010

EN

Official Journal of the European Union

C 338/90

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REPORT

on the annual accounts of the Research Executive Agency for the financial year 2009, together with the Agency’s replies

2010/C 338/16

CONTENTS

CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-2 | 91 |
| STATEMENT OF ASSURANCE ... | 3-12 | 91 |
| COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ... | 13-14 | 92 |
| OTHER MATTERS ... | 15 | 92 |
| Table ... | 93 |
| The Agency’s replies ... | 95 |

Paragraph

Paragraph

Page

Page

INTRODUCTION ...

1-2

91

STATEMENT OF ASSURANCE ...

3-12

91

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ...

13-14

92

OTHER MATTERS ...

15

92

Table ...

93

The Agency’s replies ...

The Agency’s replies

95

INTRODUCTION

INTRODUCTION

| 1. | The Research Executive Agency (hereinafter ‘the Agency’), located in Brussels, was set up by Commission Decision 2008/46/EC of 14 December 2007 (1). The Agency was established for a limited period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing specific Union activities in the field of research (2). On 15 June 2009 the Agency was officially granted its administrative and operational autonomy by the European Commission. |
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1.

The Research Executive Agency (hereinafter ‘the Agency’), located in Brussels, was set up by Commission Decision 2008/46/EC of 14 December 2007 (1). The Agency was established for a limited period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing specific Union activities in the field of research (2). On 15 June 2009 the Agency was officially granted its administrative and operational autonomy by the European Commission.

1

2

| 2. | The Agency’s final 2009 administrative budget was 21,6 million euro. The number of staff employed by the Agency at the end of the year was 310. |
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2.

The Agency’s final 2009 administrative budget was 21,6 million euro. The number of staff employed by the Agency at the end of the year was 310.

12.

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| 12. | The comments which follow do not call the Court’s opinions into question. |
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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. | In October 2009 the Agency’s initial 2009 administrative budget of 25,8 million euro was reduced by an amending budget by 4,2 million euro. The staff appropriations were reduced by almost 3 million euro (18 %), which indicates that the Agency’s budget forecast for staff was based on unrealistic assumptions for recruitments. The 2009 annual work programme, based on 88 temporary and 261 contract staff, was not adjusted in line with the decreased human resources available (72 temporary and 238 contract staff were actually employed as at 31 December 2009). |
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13.

In October 2009 the Agency’s initial 2009 administrative budget of 25,8 million euro was reduced by an amending budget by 4,2 million euro. The staff appropriations were reduced by almost 3 million euro (18 %), which indicates that the Agency’s budget forecast for staff was based on unrealistic assumptions for recruitments. The 2009 annual work programme, based on 88 temporary and 261 contract staff, was not adjusted in line with the decreased human resources available (72 temporary and 238 contract staff were actually employed as at 31 December 2009).

| 14. | An analysis of the commitments carried forward to 2010 revealed that, for provisional commitments, the automatic carry-forward was overestimated. About 770 000 euro (28 % of the tested commitments) were not covered by a legal obligation, or the services concerned related to 2010. This situation was at odds with the principle of annuality. |
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14.

An analysis of the commitments carried forward to 2010 revealed that, for provisional commitments, the automatic carry-forward was overestimated. About 770 000 euro (28 % of the tested commitments) were not covered by a legal obligation, or the services concerned related to 2010. This situation was at odds with the principle of annuality.

OTHER MATTERS

OTHER MATTERS

| 15. | With regard to staff selection procedures, the vacancy notices did not specify the maximum number of candidates to be put on the reserve lists. Insufficient justification and documentation were provided for the selection boards’ decisions, since thresholds for being invited to interview or put on the reserve list were not defined in advance and minutes were missing. These practices put at risk the transparency of the recruitment procedures. |
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15.

With regard to staff selection procedures, the vacancy notices did not specify the maximum number of candidates to be put on the reserve lists. Insufficient justification and documentation were provided for the selection boards’ decisions, since thresholds for being invited to interview or put on the reserve list were not defined in advance and minutes were missing. These practices put at risk the transparency of the recruitment procedures.

This report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 14 and 16 September 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

Research Executive Agency (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Agency
  (Commission Decision 2008/46/EC of 14 December 2007) | Governance | Resources made available to the Agency in 2009 | Products and services supplied in 2009 |
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| The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.
  For this purpose the Union shall encourage undertakings, including SMEs, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, (...) the definition of common standards and the removal of legal and fiscal obstacles to that cooperation.
  In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States:






  (a) | implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities; |

Areas of Union competence deriving from the Treaty

Competences of the Agency

(Commission Decision 2008/46/EC of 14 December 2007)

Governance

Resources made available to the Agency in 2009

Products and services supplied in 2009

The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.

For this purpose the Union shall encourage undertakings, including SMEs, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, (...) the definition of common standards and the removal of legal and fiscal obstacles to that cooperation.

In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States:

(a)

implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities;

| (b) | promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations; |
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(b)

promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations;

| (c) | dissemination and optimisation of the results of activities in Union research, technological development and demonstration; |
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(c)

dissemination and optimisation of the results of activities in Union research, technological development and demonstration;

| (d) | stimulation of the training and mobility of researchers in the Union. |
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(d)

stimulation of the training and mobility of researchers in the Union.

(Articles 179 and 180 of the TFEU)

Objective

The objective of the Agency is to manage the Programmes entrusted to it under FP7 (the People Programme, the SME actions of the Capacities Programme, and the Space and Security themes of the Cooperation Programme) efficiently and effectively, to deliver efficient and effective services to the research community and to provide centralised FP7 support services to the respective Commission services for all areas of the Cooperation, Capacities and People Specific Programmes.

With regard to the efficient and effective Programmes implementation, the Agency — as promoter of the European Research Area — aims at improving project management, establishing close contact with final beneficiaries and providing a high visibility of the European Union.

Tasks

With regard to the management of projects, the Agency concludes and manages grant agreements, involving the following operations:

| — | preparation and publication of calls for proposals, |
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preparation and publication of calls for proposals,

| — | evaluation of proposals, |
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evaluation of proposals,

| — | preparation and signature of grant agreements, |
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—

preparation and signature of grant agreements,

| — | monitoring the implementation of projects including acceptance of reports and other deliverables, |
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—

monitoring the implementation of projects including acceptance of reports and other deliverables,

| — | payments, recoveries, and application of sanctions within the meaning of Article 114(4) of the general Financial Regulation, notably when errors in declared costs have been identified following ex-post audits at the level of the final beneficiaries, |
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payments, recoveries, and application of sanctions within the meaning of Article 114(4) of the general Financial Regulation, notably when errors in declared costs have been identified following ex-post audits at the level of the final beneficiaries,

| — | ex-post publicity and dissemination of results. |
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—

ex-post publicity and dissemination of results.

With regard to FP7 Support Services, the Agency performs the following tasks:

| — | administrative support for call publication, |
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administrative support for call publication,

| — | management of the electronic reception of proposals, |
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—

management of the electronic reception of proposals,

| — | support for remote and on-site evaluations, |
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support for remote and on-site evaluations,

| — | support to the preparation of appointment letters and payments for experts, |
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—

support to the preparation of appointment letters and payments for experts,

| — | management of the Central FP7 participants database (Unique Registration Facility — URF), including support for financial capacity checks of selected beneficiaries, |
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management of the Central FP7 participants database (Unique Registration Facility — URF), including support for financial capacity checks of selected beneficiaries,

| — | management of the Research Enquiry Service. |
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—

management of the Research Enquiry Service.

1 —   Steering Committee

Comprises five members appointed by the Commission. It adopts the Agency's organisation chart and its Annual Work Programme after approval by the Commission. In addition, it adopts the administrative budget of the Agency and its Annual Activity Report.

2 —   Director

Appointed by the European Commission, manages the agency together with the Steering Committee, implements the administrative budget, sets up management and internal control systems adapted to the tasks entrusted to the agency and prepares the reports which the executive agency must present to the Commission.

3 —   External audit

Court of Auditors.

4 —   Discharge authority

Parliament, acting on recommendation from the Council.

Operational Budget

811,2 million euro of commitment appropriations and 679,5 million euro of payment appropriations. The Agency implements the Commission's operational budget under a delegation decision of the Commission.

Administrative Budget

21,6 million euro. The Agency implements the administrative budget autonomously.

Staff at 31 December 2009

TA posts: 88 listed in the establishment plan of which 72 occupied.

Contract staff: 261 staff planned of which 238 were in place as of 31 December 2009.

Total staff

Responsible for

| — | Programme management: 169 |
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Programme management: 169

| — | FP7 Support Services: 73 |
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FP7 Support Services: 73

| — | Administrative functions: 69 |
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Administrative functions: 69

For 2009, the results related to programme implementation tasks listed below cover the whole year and therefore relate to the work of the Agency and of the parent DGs (before the Agency's autonomy on 15 June).

For the People Programme, 10 calls were closed in 2009 and 9 evaluations completed. 1 290 new grant agreements were signed and 1 277 payments made (excluding payments for expert evaluators). The Agency now manages a total of 2 495 projects under this programme.

For the SME actions of the Capacities Programme, 2 calls were closed and 2 evaluations completed. 120 new grant agreements were signed and 122 payments made (excluding payments for expert evaluators). The Agency now manages a total of 247 projects under this scheme.

For the Space and Security themes of the Cooperation Programme, 2 calls were closed in 2009 and 2 evaluations completed. 32 new grant agreements were signed and 52 payments made (excluding payments to expert evaluators). TheAgency now manages a total of 78 projects under these themes.

As regards the FP7 support services, the results obtained for the period 15 June to 31 December 2009 are as follows:

| — | 64 call publications supported, |
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64 call publications supported,

| — | 13 832 proposals received through the electronic proposal submission tool, |
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13 832 proposals received through the electronic proposal submission tool,

| — | 3 067 expert evaluators contracted and 912 expert payments made (for programmes managed by the Agency only), |
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3 067 expert evaluators contracted and 912 expert payments made (for programmes managed by the Agency only),

| — | 2 795 validations of participants completed, |
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2 795 validations of participants completed,

| — | 3 772 replies sent following questions to the Research Enquiry Service. |
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3 772 replies sent following questions to the Research Enquiry Service.

In addition, as 2009 was the first operational year for the agency and staff increased from 55 to 310, great efforts were made in recruiting qualified staff to the agency and to prepare for taking over the management of programmes in June 2009.

Source: Information supplied by the Agency.

THE AGENCY’S REPLIES

| 13. | The reduction of the initial budget via an amending budget was the result of the inherent conflict between the ambitious target of setting up quickly a new organisation with the new qualified staff on the one hand and the complex and time consuming recruitment process of the public sector on the other hand. The recruitment targets have been reached with some delay and the Agency therefore did not see a valid reason for adjusting the initial annual work programme and its performance targets. |
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13.

The reduction of the initial budget via an amending budget was the result of the inherent conflict between the ambitious target of setting up quickly a new organisation with the new qualified staff on the one hand and the complex and time consuming recruitment process of the public sector on the other hand. The recruitment targets have been reached with some delay and the Agency therefore did not see a valid reason for adjusting the initial annual work programme and its performance targets.

| 14. | More than 65 % of the overestimated automatic carry-forwards were related to building charges for which the Agency had to base its estimates on information of the building promoter. The Agency is confident that for subsequent years it will be able to build on the experience of its first year of existence. Provisional commitments to be carried forward and the related legal obligations will be reassessed at year-end and adjusted to more reliable cost estimates. |
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14.

More than 65 % of the overestimated automatic carry-forwards were related to building charges for which the Agency had to base its estimates on information of the building promoter. The Agency is confident that for subsequent years it will be able to build on the experience of its first year of existence. Provisional commitments to be carried forward and the related legal obligations will be reassessed at year-end and adjusted to more reliable cost estimates.

| 15. | For the recruitment of temporary staff the Agency established reserve lists with at least twice as many candidates as vacant posts. The pre-selection of candidates to interview was done without fixing threshold, in order to get a reasonable number of shortlisted candidates.
  For future calls for expressions of interest, the Agency will take up the suggested good practices of:






  — | defining in the notice an indicative maximum number of candidates to be shortlisted and to be put on the reserve list(s), |
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15.

For the recruitment of temporary staff the Agency established reserve lists with at least twice as many candidates as vacant posts. The pre-selection of candidates to interview was done without fixing threshold, in order to get a reasonable number of shortlisted candidates.

For future calls for expressions of interest, the Agency will take up the suggested good practices of:

—

defining in the notice an indicative maximum number of candidates to be shortlisted and to be put on the reserve list(s),

| — | fixing thresholds for the shortlist(s) before the start of the selection process. |
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fixing thresholds for the shortlist(s) before the start of the selection process.

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(1)  OJ L 11, 15.1.2008, p. 9.

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

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(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 11, 16.1.2003, p. 1.

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(7)  Article 25 of Commission Regulation (EC) No 1653/2004 of 21 September 2004 (OJ L 297, 22.9.2004, p. 6).

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(8)  Article 29 of Regulation (EC) No 1653/2004.

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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 VI of Commission Regulation (EC) No 1653/2004 as last amended by Regulation (EC) No 651/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 15).

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 15 June 2010 and received by the Court on 2 July 2010. 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://ec.europa.eu/research/rea/

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Official Journal of the European Union

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