# Official Journal C 342/2010

| | ISSN 1725-2423
  doi:10.3000/17252423.C_2010.342.eng |
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| Official Journal
  of the European Union | C 342 |
| | |
| English edition | Information and Notices | Volume 5316 December 2010 |

ISSN 1725-2423

doi:10.3000/17252423.C_2010.342.eng

Official Journal

of the European Union

C 342

English edition

Information and Notices

Volume 5316 December 2010

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| Notice No | Contents | page |
| --- | --- | --- |
| | IV   Notices |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | Court of Auditors |
| 2010/C 342/01 | Report on the annual accounts of the Artemis Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking | 1 |
| 2010/C 342/02 | Report on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking | 7 |
| 2010/C 342/03 | Report on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking | 15 |
| 2010/C 342/04 | Report on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking | 22 |
| 2010/C 342/05 | Report on the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking | 30 |

Notice No

Contents

page

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

2010/C 342/01

Report on the annual accounts of the Artemis Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

1

2010/C 342/02

Report on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

7

2010/C 342/03

Report on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

15

2010/C 342/04

Report on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

22

2010/C 342/05

Report on the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

30

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EN

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IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

| 16.12.2010 | EN | Official Journal of the European Union | C 342/1 |
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16.12.2010

EN

Official Journal of the European Union

C 342/1

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REPORT

on the annual accounts of the Artemis Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/01

TABLE OF CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-5 | 2 |
| STATEMENT OF ASSURANCE ... | 6-15 | 2 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 16-19 | 3 |
| OTHER MATTERS ... | 20-25 | 3 |
| Table ... | 4 |
| Replies of the Joint Undertaking ... | 6 |

Paragraph

Page

INTRODUCTION ...

1-5

2

STATEMENT OF ASSURANCE ...

6-15

2

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

16-19

3

OTHER MATTERS ...

20-25

3

Table ...

4

Replies of the Joint Undertaking ...

6

INTRODUCTION

| 1. | The Artemis Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
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1.

The Artemis Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The founding members of the Artemis Joint Undertaking are the European Union represented by the Commission, Belgium, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Hungary, the Netherlands, Austria, Portugal, Romania, Slovenia, Finland, Sweden, the United Kingdom and ArtemisIA, an association representing companies and other research organisations active in the field of Embedded Computing Systems in Europe. At the end of 2009, Cyprus, the Czech Republic, Latvia and Norway were also members of the Joint Undertaking. |
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2.

The founding members of the Artemis Joint Undertaking are the European Union represented by the Commission, Belgium, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Hungary, the Netherlands, Austria, Portugal, Romania, Slovenia, Finland, Sweden, the United Kingdom and ArtemisIA, an association representing companies and other research organisations active in the field of Embedded Computing Systems in Europe. At the end of 2009, Cyprus, the Czech Republic, Latvia and Norway were also members of the Joint Undertaking.

| 3. | The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (see Table). |
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3.

The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (see Table).

| 4. | The maximum EU contribution to the Artemis Joint Undertaking to cover running costs and research activities is 420 million euro to be paid from the budget of the Seventh Research Framework Programme. The ArtemisIA association is to make a maximum contribution of 30 million euro to the running costs. Artemis Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects. |
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4.

The maximum EU contribution to the Artemis Joint Undertaking to cover running costs and research activities is 420 million euro to be paid from the budget of the Seventh Research Framework Programme. The ArtemisIA association is to make a maximum contribution of 30 million euro to the running costs. Artemis Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects.

| 5. | The Joint Undertaking started to work autonomously on 26 October 2009. |
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5.

The Joint Undertaking started to work autonomously on 26 October 2009.

15.

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| 15. | 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 BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | The final budget included commitment appropriations of 46 million euro and payment appropriations of 8 million euro. The utilisation rates for commitment and payment appropriations were 81 % and 20 % respectively. The relatively low utilisation rate for payment appropriations reflects the start-up phase of the Artemis research programme. |
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16.

The final budget included commitment appropriations of 46 million euro and payment appropriations of 8 million euro. The utilisation rates for commitment and payment appropriations were 81 % and 20 % respectively. The relatively low utilisation rate for payment appropriations reflects the start-up phase of the Artemis research programme.

Presentation of the accounts: members’ contributions

| 17. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
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17.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 18. | The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts. |
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18.

The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts.

| 19. | The Court considers that the presentation of members’ contributions in the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
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19.

The Court considers that the presentation of members’ contributions in the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

Internal control systems

| 20. | The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information system during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking. |
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20.

The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information system during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking.

| 21. | In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009. |
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21.

In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009.

Lack of host State agreement

| 22. | Article 17 of Regulation (EC) No 74/2008 setting up the Artemis Joint Undertaking states that a host agreement should be concluded between the Artemis Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Artemis Joint Undertaking. However, by 2009 year end no such agreement had been concluded. |
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22.

Article 17 of Regulation (EC) No 74/2008 setting up the Artemis Joint Undertaking states that a host agreement should be concluded between the Artemis Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Artemis Joint Undertaking. However, by 2009 year end no such agreement had been concluded.

Internal Audit Function and Commission Internal Audit Service

| 23. | Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up. |
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23.

Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up.

| 24. | In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified. |
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24.

In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified.

| 25. | Article 10 of the Statutes of the Artemis Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole. |
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25.

Article 10 of the Statutes of the Artemis Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

Artemis Joint Undertaking (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Regulation (EC) No 74/2008 | Governance | Resources made available to the Joint Undertaking in 2009 | Main achievements for 2009 |
| --- | --- | --- | --- | --- |
| Treaty on the Functioning of the European Union


  Article 187

  (ex Article 171 EC)
  The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes. | Objectives

  The Artemis Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and the Theme ‘Information and communication technologies’ of the Specific Programme ‘Cooperation’. It shall in particular:






  (a) | define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications. Activities for the implementation of the Research Agenda are hereinafter referred to as ‘R & D Activities’; |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Regulation (EC) No 74/2008

Governance

Resources made available to the Joint Undertaking in 2009

Main achievements for 2009

Treaty on the Functioning of the European Union

Article 187

(ex Article 171 EC)

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

Objectives

The Artemis Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and the Theme ‘Information and communication technologies’ of the Specific Programme ‘Cooperation’. It shall in particular:

(a)

define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications. Activities for the implementation of the Research Agenda are hereinafter referred to as ‘R & D Activities’;

| (b) | support the implementation of the R & D Activities notably by awarding funding to participants in selected projects following competitive calls for proposals; |
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(b)

support the implementation of the R & D Activities notably by awarding funding to participants in selected projects following competitive calls for proposals;

| (c) | promote a public-private partnership aimed at mobilising and pooling Union, national and private efforts, increasing overall R & D investments in the field of Embedded Computing Systems, and fostering collaboration between the public and private sectors; |
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(c)

promote a public-private partnership aimed at mobilising and pooling Union, national and private efforts, increasing overall R & D investments in the field of Embedded Computing Systems, and fostering collaboration between the public and private sectors;

| (d) | achieve synergy and coordination of European R & D efforts into the field of Embedded Computing Systems including, when added value can be created, the progressive integration in the Artemis Joint Undertaking of the related activities in this field currently implemented through intergovernmental R & D schemes (Eureka); |
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(d)

achieve synergy and coordination of European R & D efforts into the field of Embedded Computing Systems including, when added value can be created, the progressive integration in the Artemis Joint Undertaking of the related activities in this field currently implemented through intergovernmental R & D schemes (Eureka);

| (e) | promote the involvement of SMEs in its activities in line with the objectives of the Seventh Framework Programme. |
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(e)

promote the involvement of SMEs in its activities in line with the objectives of the Seventh Framework Programme.

Tasks

| (a) | to ensure the establishment and sustainable management of the JTI on Embedded Computing Systems; |
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(a)

to ensure the establishment and sustainable management of the JTI on Embedded Computing Systems;

| (b) | to define and make any necessary adjustment to the Multiannual Strategic Plan including the Research Agenda as referred to in Article 19(1); |
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(b)

to define and make any necessary adjustment to the Multiannual Strategic Plan including the Research Agenda as referred to in Article 19(1);

| (c) | to define and carry out Annual Implementation Plans as referred to in Article 19(3) for executing the Multiannual Strategic Plan as referred to in Article 19(1); |
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(c)

to define and carry out Annual Implementation Plans as referred to in Article 19(3) for executing the Multiannual Strategic Plan as referred to in Article 19(1);

| (d) | to initiate calls for proposals, to evaluate proposals, and award funding to projects selected through open, transparent and effective procedures, within the limits of available funds; |
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(d)

to initiate calls for proposals, to evaluate proposals, and award funding to projects selected through open, transparent and effective procedures, within the limits of available funds;

| (e) | to develop close cooperation and ensure coordination with European, in particular the Seventh Framework Programme, national and transnational activities, bodies and stakeholders, aiming at fostering a fertile innovation environment in Europe and better synergies and exploitation of research and development results in the area of Embedded Computing Systems; |
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(e)

to develop close cooperation and ensure coordination with European, in particular the Seventh Framework Programme, national and transnational activities, bodies and stakeholders, aiming at fostering a fertile innovation environment in Europe and better synergies and exploitation of research and development results in the area of Embedded Computing Systems;

| (f) | to monitor progress towards the objectives of the Artemis Joint Undertaking; |
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(f)

to monitor progress towards the objectives of the Artemis Joint Undertaking;

| (g) | to undertake communication and dissemination activities; |
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(g)

to undertake communication and dissemination activities;

| (h) | to publish information on the projects, including the name of the participants and the amount of the financial contribution of the Artemis Joint Undertaking per participant; |
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(h)

to publish information on the projects, including the name of the participants and the amount of the financial contribution of the Artemis Joint Undertaking per participant;

| (i) | to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation. |
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(i)

to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation.

The Bodies of the Artemis Joint Undertaking shall be:

| — | the Governing Board, |
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—

the Governing Board,

| — | the Executive Director, |
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—

the Executive Director,

| — | the Public Authorities Board, |
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—

the Public Authorities Board,

| — | the Industry and Research Committee. |
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—

the Industry and Research Committee.

1 —   Governing Board

The Governing Board shall have overall responsibility for the operations of the Artemis Joint Undertaking and shall oversee the implementation of its activities.

2 —   Executive Director

The Executive Director shall be the chief executive responsible for the day-to-day management of the Artemis Joint Undertaking in accordance with the decisions of the Governing Board and its legal representative. He shall perform his tasks with complete independence and shall be accountable to the Governing Board. The Director shall exercise, in respect of the staff, the powers laid down in Article 7(2) of the Regulation.

3 —   Public Authorities Board shall:

| (a) | ensure that the principles of fairness and transparency are properly applied in the allocation of public funding to participants in projects; |
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(a)

ensure that the principles of fairness and transparency are properly applied in the allocation of public funding to participants in projects;

| (b) | discuss and approve the Annual Work Programme referred to in Article 19(2) upon proposals from the Industry and Research Committee, including the budgets available for calls for proposals; |
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(b)

discuss and approve the Annual Work Programme referred to in Article 19(2) upon proposals from the Industry and Research Committee, including the budgets available for calls for proposals;

| (c) | approve the rules of procedure for calls for proposals, for the evaluation and selection of proposals and for monitoring of projects; |
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(c)

approve the rules of procedure for calls for proposals, for the evaluation and selection of proposals and for monitoring of projects;

| (d) | upon proposal of the representative of the Union, decide on the Artemis Joint Undertaking financial contribution to the budget of the calls for proposals; |
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(d)

upon proposal of the representative of the Union, decide on the Artemis Joint Undertaking financial contribution to the budget of the calls for proposals;

| (e) | approve the scope and the launch of calls for proposals; |
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(e)

approve the scope and the launch of calls for proposals;

| (f) | approve the selection of project proposals to receive public funding following calls for proposals; |
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(f)

approve the selection of project proposals to receive public funding following calls for proposals;

| (g) | upon proposal of the representative of the Union, decide on the percentage of the Artemis Joint Undertaking’s financial contribution referred to in Article 13(6)(a) to participants in projects arising from calls for proposals in any given year; |
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(g)

upon proposal of the representative of the Union, decide on the percentage of the Artemis Joint Undertaking’s financial contribution referred to in Article 13(6)(a) to participants in projects arising from calls for proposals in any given year;

| (h) | adopt its rules of procedure in accordance with paragraph 3. |
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(h)

adopt its rules of procedure in accordance with paragraph 3.

4 —   Industry and Research Committee shall:

| (a) | elaborate the draft Multiannual Strategic Plan referred to in Article 19(1), including the content and update of the Research Agenda, and submit it to the Governing Board for approval; |
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(a)

elaborate the draft Multiannual Strategic Plan referred to in Article 19(1), including the content and update of the Research Agenda, and submit it to the Governing Board for approval;

| (b) | prepare the draft Annual Work Programme referred to in Article 19(2), including proposals for the content of calls for proposals to be launched by the Artemis Joint Undertaking; |
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(b)

prepare the draft Annual Work Programme referred to in Article 19(2), including proposals for the content of calls for proposals to be launched by the Artemis Joint Undertaking;

| (c) | elaborate proposals regarding the technological, research and innovation strategy of the Artemis Joint Undertaking; |
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(c)

elaborate proposals regarding the technological, research and innovation strategy of the Artemis Joint Undertaking;

| (d) | elaborate proposals for activities regarding the creation of open innovation environments, promoting the participation of SMEs, developing standards transparently and with openness to participation, international cooperation, dissemination and public relations; |
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(d)

elaborate proposals for activities regarding the creation of open innovation environments, promoting the participation of SMEs, developing standards transparently and with openness to participation, international cooperation, dissemination and public relations;

| (e) | advise the other bodies on any issue related to planning and operating research and development programmes, fostering partnerships and leveraging resources in Europe in order to achieve the objectives of the Artemis Joint Undertaking; |
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(e)

advise the other bodies on any issue related to planning and operating research and development programmes, fostering partnerships and leveraging resources in Europe in order to achieve the objectives of the Artemis Joint Undertaking;

| (f) | appoint working groups where necessary under the overall coordination of one or more members of the Industry and Research Committee in order to achieve the above tasks; |
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(f)

appoint working groups where necessary under the overall coordination of one or more members of the Industry and Research Committee in order to achieve the above tasks;

| (g) | adopt its rules of procedure in accordance with paragraph 3. |
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(g)

adopt its rules of procedure in accordance with paragraph 3.

5 —   External Audit

Court of Auditors.

6 —   Discharge Authority

Parliament on a recommendation of the Council.

Budget

7,97 million euro that represent 100 % EU contribution.

Staff at 31 December 2009

10 posts in the establishment plan of which 9 occupied at 31.12.2009.

Total staff number: 9

| — | 7 temporary agents (AD), |
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—

7 temporary agents (AD),

| — | 2 contract agents (administrative assistants). |
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—

2 contract agents (administrative assistants).

| — | autonomy was granted by the Commission on 26 October 2009, |
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—

autonomy was granted by the Commission on 26 October 2009,

| — | launch of the 2nd call for proposals, |
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—

launch of the 2nd call for proposals,

| — | negotiation and start of R & D projects of the 2nd call, |
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—

negotiation and start of R & D projects of the 2nd call,

| — | monitoring and review of the 1st call projects, |
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—

monitoring and review of the 1st call projects,

| — | signature of the General Financing Agreement with the Commission, |
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—

signature of the General Financing Agreement with the Commission,

| — | 6 service level agreements signed with Commission services. |
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—

6 service level agreements signed with Commission services.

Source: Information submitted by the Joint Undertaking.

REPLIES OF THE JOINT UNDERTAKING

Internal control systems

Paragraph 20

The Executive Director has decided to implement the remaining 15 internal control standards (one had been adopted previously) in two phases. A first phase was adopted by the Governing Board on 23 March 2010. The remaining ICS have been adopted by the Governing Board on 22 September 2010.

Paragraph 21

Artemis Joint Undertaking acknowledges the comments of the Court. However, in its current temporary premises, the Joint Undertaking relies on the IT infrastructure provided by the Commission as host. Artemis Joint Undertaking is engaged in a procedure for the selection of its definitive location. On completion of this process, the Joint Undertaking will be in a position to take responsibility for its own IT infrastructure and will take into account the issues raised by the Court.

Lack of host State agreement

Paragraph 22

Artemis Joint Undertaking continues to cooperate for the implementation of the provisions of a host State agreement and awaits the outcome of the next steps of the procedure to have an agreement signed.

Internal Audit Function and Commission Internal Audit Service

Paragraph 23

In the initial phase of operation of the Joint Undertaking, resources were directed to the priority tasks of successfully managing the process towards autonomy, completing the 2009 call for proposals (including the negotiation of contracts) and launching the 2010 call for proposals. The Joint Undertaking confirms its intention to put in place an internal auditing function during 2010.

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(1)  Council Regulation (EC) No 74/2008 of 20 December 2007 on the establishment of the Artemis Joint Undertaking to implement a Joint Technology Initiative on Embedded Computing Systems (OJ L 30, 4.2.2008, p. 52).

1

(2)  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.

2

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

3

(4)  The budget implementation report comprises the budget outturn account and its annex.

4

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

5

(6)  Financial Rules of the Artemis Joint Undertaking adopted by Decision of its Governing Board on 18 December 2008.

6

(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 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 EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are incorporated in the Financial Rules of the Artemis Joint Undertaking.

9

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

10

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| 16.12.2010 | EN | Official Journal of the European Union | C 342/7 |
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16.12.2010

EN

Official Journal of the European Union

C 342/7

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REPORT

on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/02

TABLE OF CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-6 | 8 |
| STATEMENT OF ASSURANCE ... | 7-16 | 8 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 17-22 | 9 |
| OTHER MATTERS ... | 23-29 | 9 |
| Table ... | 11 |
| Replies of the Joint Undertaking ... | 13 |

Paragraph

Page

INTRODUCTION ...

1-6

8

STATEMENT OF ASSURANCE ...

7-16

8

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

17-22

9

OTHER MATTERS ...

23-29

9

Table ...

11

Replies of the Joint Undertaking ...

13

INTRODUCTION

| 1. | The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007 (1) for the period up to 31 December 2017. |
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1.

The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007 (1) for the period up to 31 December 2017.

| 2. | The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air transport technologies in the EU for earliest possible deployment (see Table). |
| --- | --- |

2.

The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air transport technologies in the EU for earliest possible deployment (see Table).

| 3. | The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘integrated technology demonstrators’ (ITDs). |
| --- | --- |

3.

The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘integrated technology demonstrators’ (ITDs).

| 4. | The founding members of the Joint Undertaking are the European Union represented by the Commission as public representative, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs. |
| --- | --- |

4.

The founding members of the Joint Undertaking are the European Union represented by the Commission as public representative, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs.

| 5. | The maximum EU contribution to the Clean Sky Joint Undertaking to cover running costs and research activities is 800 million euro to be paid from the budget of the Seventh Research Framework Programme. Other Members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions. |
| --- | --- |

5.

The maximum EU contribution to the Clean Sky Joint Undertaking to cover running costs and research activities is 800 million euro to be paid from the budget of the Seventh Research Framework Programme. Other Members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions.

| 6. | The Joint Undertaking started working autonomously on 16 November 2009. |
| --- | --- |

6.

The Joint Undertaking started working autonomously on 16 November 2009.

16.

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| 16. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

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

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 17. | The adoption, structure and presentation of the approved budget of the Joint Undertaking for 2009 were not in line with the Council Regulation setting up the Clean Sky Joint Undertaking, nor the Financial Rules of the Joint Undertaking. The budget does not respect the principle of equilibrium and does not include all the required elements (for example, a staff establishment plan). |
| --- | --- |

17.

The adoption, structure and presentation of the approved budget of the Joint Undertaking for 2009 were not in line with the Council Regulation setting up the Clean Sky Joint Undertaking, nor the Financial Rules of the Joint Undertaking. The budget does not respect the principle of equilibrium and does not include all the required elements (for example, a staff establishment plan).

| 18. | The final budget included commitment appropriations of 91 million euro and payment appropriations of 60 million euro. The utilisation rate for commitment appropriations was 98 %, the rate for payment appropriations was less than 1 %. The Joint Undertaking concluded contracts for 70,6 million euro in December 2009, but the pre-financing payments amounting to 56,5 million euro could only be made in January 2010. |
| --- | --- |

18.

The final budget included commitment appropriations of 91 million euro and payment appropriations of 60 million euro. The utilisation rate for commitment appropriations was 98 %, the rate for payment appropriations was less than 1 %. The Joint Undertaking concluded contracts for 70,6 million euro in December 2009, but the pre-financing payments amounting to 56,5 million euro could only be made in January 2010.

| 19. | The research activities pre-financed by the Commission in 2008 on behalf of the Joint Undertaking were not fully implemented during 2009. Due to delays in the projects, only 8,7 million euro or 65 % of the 13,6 million euro pre-financing was used. Therefore, at the end of 2009, the Joint Undertaking had a potential outstanding recoverable amount of 4,9 million euro. |
| --- | --- |

19.

The research activities pre-financed by the Commission in 2008 on behalf of the Joint Undertaking were not fully implemented during 2009. Due to delays in the projects, only 8,7 million euro or 65 % of the 13,6 million euro pre-financing was used. Therefore, at the end of 2009, the Joint Undertaking had a potential outstanding recoverable amount of 4,9 million euro.

Presentation of the accounts: members’ contributions

| 20. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
| --- | --- |

20.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 21. | The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts. |
| --- | --- |

21.

The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts.

| 22. | The Court considers that the presentation of members’ contributions in the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
| --- | --- |

22.

The Court considers that the presentation of members’ contributions in the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

Internal control systems

| 23. | The Joint Undertaking is in the start-up phase and procedures have been developed for relevant areas of the organisation such as the financial workflow and procurements. However, as demonstrated by the Court’s audit findings, these internal control procedures require further development in order to meet the requirements for effective and efficient internal control set out in the Financial Rules of the Joint Undertaking. |
| --- | --- |

23.

The Joint Undertaking is in the start-up phase and procedures have been developed for relevant areas of the organisation such as the financial workflow and procurements. However, as demonstrated by the Court’s audit findings, these internal control procedures require further development in order to meet the requirements for effective and efficient internal control set out in the Financial Rules of the Joint Undertaking.

| 24. | At the end of 2009, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking. |
| --- | --- |

24.

At the end of 2009, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking.

| 25. | The Clean Sky Joint Undertaking uses the Commission’s financial management IT tools, which may be considered robust systems. However further development of IT processes and policies is necessary to ensure business continuity. |
| --- | --- |

25.

The Clean Sky Joint Undertaking uses the Commission’s financial management IT tools, which may be considered robust systems. However further development of IT processes and policies is necessary to ensure business continuity.

| 26. | The procedure laid down in the Clean Sky Financial Rules and the General Agreement with the Commission for the request for payment of the Commission contributions was not properly applied. The Court tested five recovery orders, and found that in each case, the request for payment was not accompanied by the required cash-flow forecast. |
| --- | --- |

26.

The procedure laid down in the Clean Sky Financial Rules and the General Agreement with the Commission for the request for payment of the Commission contributions was not properly applied. The Court tested five recovery orders, and found that in each case, the request for payment was not accompanied by the required cash-flow forecast.

Internal Audit Function and Commission Internal Audit Service

| 27. | In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified. |
| --- | --- |

27.

In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified.

| 28. | Article 11 of the Statutes of the Clean Sky Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. In the Court’s opinion, such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole. |
| --- | --- |

28.

Article 11 of the Statutes of the Clean Sky Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. In the Court’s opinion, such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole.

Lack of host State agreement

| 29. | According to the Council Regulation of December 2007 setting up the Joint Undertaking, a host agreement should be concluded between the Clean Sky Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium as host State to the Clean Sky Joint Undertaking. At the date of the audit, no such agreement had been signed. |
| --- | --- |

29.

According to the Council Regulation of December 2007 setting up the Joint Undertaking, a host agreement should be concluded between the Clean Sky Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium as host State to the Clean Sky Joint Undertaking. At the date of the audit, no such agreement had been signed.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

The Clean Sky Joint Undertaking (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Regulation (EC) No 71/2008 | Governance | Resources made available to the Joint Undertaking in 2009 | Main achievements for 2009 |
| --- | --- | --- | --- | --- |
| Articles 187 and 188 of the Treaty on the Functioning of the European Union

  Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme provides for a Union contribution to the establishment of long-term public private partnerships in the form of joint technology initiatives which could be implemented through Joint Undertakings within the meaning of Article 187 TFEU. | Objectives

  The Clean Sky Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular Theme 7; Transport (including Aeronautics) of the Specific Programme Cooperation.






  (a) | accelerating in the EU the development, validation and demonstration of clean air transport technologies for earliest possible deployment; |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Regulation (EC) No 71/2008

Governance

Resources made available to the Joint Undertaking in 2009

Main achievements for 2009

Articles 187 and 188 of the Treaty on the Functioning of the European Union

Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme provides for a Union contribution to the establishment of long-term public private partnerships in the form of joint technology initiatives which could be implemented through Joint Undertakings within the meaning of Article 187 TFEU.

Objectives

The Clean Sky Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular Theme 7; Transport (including Aeronautics) of the Specific Programme Cooperation.

(a)

accelerating in the EU the development, validation and demonstration of clean air transport technologies for earliest possible deployment;

| (b) | ensuring coherent implementation of European research efforts aiming at environmental improvements in the field of air transport; |
| --- | --- |

(b)

ensuring coherent implementation of European research efforts aiming at environmental improvements in the field of air transport;

| (c) | creating a radically innovative air transport system based on the integration of advanced technologies and full-scale demonstrators, with the target of reducing the environmental impact of air transport through significant reduction of noise and gaseous emissions, and improvement of the fuel economy of aircrafts; |
| --- | --- |

(c)

creating a radically innovative air transport system based on the integration of advanced technologies and full-scale demonstrators, with the target of reducing the environmental impact of air transport through significant reduction of noise and gaseous emissions, and improvement of the fuel economy of aircrafts;

| (d) | accelerating the generation of new knowledge, innovation and the uptake of research proving the relevant technologies and fully integrated system of systems, in the appropriate operational environment, leading to strengthened industrial competitiveness. |
| --- | --- |

(d)

accelerating the generation of new knowledge, innovation and the uptake of research proving the relevant technologies and fully integrated system of systems, in the appropriate operational environment, leading to strengthened industrial competitiveness.

Tasks

| (a) | bringing together a range of ITDs with the emphasis on innovative technologies and development of full-scale demonstrators; |
| --- | --- |

(a)

bringing together a range of ITDs with the emphasis on innovative technologies and development of full-scale demonstrators;

| (b) | focusing efforts within ITDs on key deliverables that can help meet Europe’s environmental and competitiveness goals; |
| --- | --- |

(b)

focusing efforts within ITDs on key deliverables that can help meet Europe’s environmental and competitiveness goals;

| (c) | enhancing the technology verification process in order to identify and remove obstacles to future market penetration; |
| --- | --- |

(c)

enhancing the technology verification process in order to identify and remove obstacles to future market penetration;

| (d) | pooling user requirements to guide investment in research and development towards operational and marketable solutions; |
| --- | --- |

(d)

pooling user requirements to guide investment in research and development towards operational and marketable solutions;

| (e) | implementing the research and development activities needed, where appropriate by awarding grants following calls for proposals; |
| --- | --- |

(e)

implementing the research and development activities needed, where appropriate by awarding grants following calls for proposals;

| (f) | awarding grants to support research performed by its Members and by other entities selected following calls for proposals in accordance with open criteria agreed by the Governing Board; |
| --- | --- |

(f)

awarding grants to support research performed by its Members and by other entities selected following calls for proposals in accordance with open criteria agreed by the Governing Board;

| (g) | publishing information on the projects, including the name of the recipients and the amount of the financial contribution of the Clean Sky Joint Undertaking per recipient; |
| --- | --- |

(g)

publishing information on the projects, including the name of the recipients and the amount of the financial contribution of the Clean Sky Joint Undertaking per recipient;

| (h) | ensuring the provision of services and supply contracts, where appropriate, through calls for tender; |
| --- | --- |

(h)

ensuring the provision of services and supply contracts, where appropriate, through calls for tender;

| (i) | mobilising the public and private sector funds needed; |
| --- | --- |

(i)

mobilising the public and private sector funds needed;

| (j) | liaising with national and international activities in the Joint Undertaking technical domain, in particular with the SESAR Joint Undertaking; |
| --- | --- |

(j)

liaising with national and international activities in the Joint Undertaking technical domain, in particular with the SESAR Joint Undertaking;

| (k) | informing, by way of periodic meetings, the National States Representative Group and involving ACARE; |
| --- | --- |

(k)

informing, by way of periodic meetings, the National States Representative Group and involving ACARE;

| (l) | notifying legal entities that have concluded a grant agreement with the Clean Sky Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme; |
| --- | --- |

(l)

notifying legal entities that have concluded a grant agreement with the Clean Sky Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme;

| (m) | stimulating the involvement of SMEs in its activities, in line with the objectives of the Seventh Research Framework Programme; in this respect the Clean Sky Joint Undertaking shall establish relevant quantitative targets in line with those set in the Seventh Framework Programme; |
| --- | --- |

(m)

stimulating the involvement of SMEs in its activities, in line with the objectives of the Seventh Research Framework Programme; in this respect the Clean Sky Joint Undertaking shall establish relevant quantitative targets in line with those set in the Seventh Framework Programme;

| (n) | developing close cooperation and ensure coordination with related European (in particular the Framework Programme), national and transnational activities. |
| --- | --- |

(n)

developing close cooperation and ensure coordination with related European (in particular the Framework Programme), national and transnational activities.

1 —   Governing Board

The Governing Board is the governing body of the Clean Sky Joint Undertaking.

2 —   ITD Steering Committees

ITD Steering Committees shall be established by the Governing Board for each of the six ITDs. The following ITDs shall be established:

| (a) | Smart Fixed Wing; |
| --- | --- |

(a)

Smart Fixed Wing;

| (b) | Green Regional Aircraft; |
| --- | --- |

(b)

Green Regional Aircraft;

| (c) | Green Rotorcraft; |
| --- | --- |

(c)

Green Rotorcraft;

| (d) | Systems for Green Operations; |
| --- | --- |

(d)

Systems for Green Operations;

| (e) | Green and Sustainable Engine; |
| --- | --- |

(e)

Green and Sustainable Engine;

| (f) | Eco-Design. |
| --- | --- |

(f)

Eco-Design.

3 —   National States Representative Group

The National States Representative Group shall consist of one representative of each Member State and of each other country associated with the Framework Programme. It shall elect a chairman from among its members.

4 —   The General Forum

The General Forum is a consultative body to the Clean Sky Joint Undertaking. The General Forum shall be composed of one representative from:

| (a) | each Member of the Clean Sky Joint Undertaking; |
| --- | --- |

(a)

each Member of the Clean Sky Joint Undertaking;

| (b) | each Partner. |
| --- | --- |

(b)

each Partner.

5 —   Executive Director

The Director shall be responsible for the day-to-day management of the Joint Undertaking and its legal representative. He shall be accountable to the Governing Board.

6 —   External Audit

Court of Auditors.

7 —   Discharge Authority

Parliament on a recommendation of the Council.

Budget

95,23 million euro of which 91 million euro funded by EU budget contribution; 3,39 million euro in-cash contribution and 91,84 million euro in-kind contribution from private industry members foreseen

Staff at 31 December 2009

18 posts in the establishment plan of which 10 occupied at 31.12.2009 (includes 1 CA post).

Total staff number: 10

assigned to the following duties:

| — | operational tasks: 2, |
| --- | --- |

—

operational tasks: 2,

| — | administrative and support tasks: 4, |
| --- | --- |

—

administrative and support tasks: 4,

| — | mixed tasks: 4. |
| --- | --- |

—

mixed tasks: 4.

Operational achievements:

| — | Smart Fixed-Wing Aircraft: choice of the high-speed demonstrator and counter-rotating open rotor flying test bed, |
| --- | --- |

—

Smart Fixed-Wing Aircraft: choice of the high-speed demonstrator and counter-rotating open rotor flying test bed,

| — | Green Regional Aircraft: definition of the main requirements for primary structures; screening of promising technologies for low-noise configuration, |
| --- | --- |

—

Green Regional Aircraft: definition of the main requirements for primary structures; screening of promising technologies for low-noise configuration,

| — | Green Rotorcraft: definition of a baseline rotor for innovative blades, tools for on board management of low noise flight paths, |
| --- | --- |

—

Green Rotorcraft: definition of a baseline rotor for innovative blades, tools for on board management of low noise flight paths,

| — | Sustainable and Green Engines: Initial propeller system design and configuration studies completed, preliminary design of modules, |
| --- | --- |

—

Sustainable and Green Engines: Initial propeller system design and configuration studies completed, preliminary design of modules,

| — | Systems for Green Operations: provision of all data reference and high-level specification for large aircraft, selection of flight management, |
| --- | --- |

—

Systems for Green Operations: provision of all data reference and high-level specification for large aircraft, selection of flight management,

| — | Eco-Design: Finalisation requirements for the greening of new materials, manufacturing process, long-life structure and aircraft end of life; state-of-the-art analysis to highlight more than 150 technology candidates, |
| --- | --- |

—

Eco-Design: Finalisation requirements for the greening of new materials, manufacturing process, long-life structure and aircraft end of life; state-of-the-art analysis to highlight more than 150 technology candidates,

| — | launch of the first call for proposals and relevant selection (57 topics). |
| --- | --- |

—

launch of the first call for proposals and relevant selection (57 topics).

Other main achievements:

| — | Clean Sky autonomy was achieved on 16 November 2009, |
| --- | --- |

—

Clean Sky autonomy was achieved on 16 November 2009,

| — | a joint procedure for the acquisition of final premises to house Clean Sky was launched together with 4 other JTIs. |
| --- | --- |

—

a joint procedure for the acquisition of final premises to house Clean Sky was launched together with 4 other JTIs.

Source: Information submitted by the Joint Undertaking.

REPLIES OF THE JOINT UNDERTAKING

Implementation of the budget

Paragraph 17

Clean Sky acknowledges the weaknesses mentioned relating to the budget and establishment plan and has since resolved this situation with new Governing Board decisions on these issues for the 2010 budget.

Paragraph 18

Clean Sky acknowledges the low implementation rate for payments in 2009, which was a consequence of the start-up phase of the JU. After having reached its full workforce in April 2010, it has taken steps to reach a satisfactory timely execution of payments for pre-financing from 2010.

Paragraph 19

The start-up phase of the Clean Sky programme has resulted in some underimplementation of the budget. The Joint Undertaking has addressed the need for improvement on this issue with its industrial partners and is enforcing the monitoring of budget implementation in 2010.

Presentation of the accounts: members’ contributions

Paragraphs 20-22

Clean Sky JU intends to continue to align itself with the harmonised approach of all JUs and welcomes any guidance in this context.

Internal control systems

Paragraph 23

Clean Sky continues to develop its internal controls and is putting in place consistent and efficient methods of working which take into account the CS internal control standards for effective management, through a comprehensive process approach.

Paragraph 24

The Accounting Officer has taken on board the remarks of the Court concerning the validation of the underlying business processes and the accounting system and has incorporated a statement regarding the validation of systems in the Certificate of the Accounting Officer in the final accounts. She will continue to work on this in 2010 as these processes mature.

Paragraph 25

Clean Sky takes note of the Court’s comment and is taking steps to improve its IT processes and policies. The business continuity aspects are being developed in conjunction with the other Joint Undertakings, with whom Clean Sky shares its IT infrastructure.

Paragraph 26

Clean Sky will endeavour to follow the procedure set out in the Financing Agreement with the European Commission for its future instalment requests. A mechanism for monitoring cash-flow forecasts has been set up in 2010.

Internal Audit Function and Commission Internal Audit Service

Paragraphs 27-28

Clean Sky has addressed this issue with the Internal Audit Service of the Commission and with DG Research in a joint note issued in March 2010 by the Executive Directors of the Clean Sky and Innovative Medicines Initiative Joint Undertakings.

Lack of host State agreement

Paragraph 29

Clean Sky continues to cooperate for the implementation of the provisions of a host State agreement and awaits the outcome of the next steps of the procedure to have an agreement signed.

---

(1)  Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking (OJ L 30, 4.2.2008, p. 1).

1

(2)  These accounts should be 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.

2

(3)  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.

3

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

4

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

5

(6)  Financial Rules of the Clean Sky Joint Undertaking adopted by Decision of its Governing Board on 7 November 2008.

6

(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 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 EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are incorporated in the Financial Rules of Clean Sky Joint Undertaking.

9

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

10

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| 16.12.2010 | EN | Official Journal of the European Union | C 342/15 |
| --- | --- | --- | --- |

16.12.2010

EN

Official Journal of the European Union

C 342/15

---

REPORT

on the annual accounts of the Innovative Medicines Initiative Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/03

TABLE OF CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-5 | 16 |
| STATEMENT OF ASSURANCE ... | 6-15 | 16 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 16-19 | 17 |
| OTHER MATTERS ... | 20-25 | 17 |
| Table ... | 18 |
| Replies of the Joint Undertaking ... | 21 |

Paragraph

Page

INTRODUCTION ...

1-5

16

STATEMENT OF ASSURANCE ...

6-15

16

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

16-19

17

OTHER MATTERS ...

20-25

17

Table ...

18

Replies of the Joint Undertaking ...

21

INTRODUCTION

| 1. | The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years. |
| --- | --- |

1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

| 2. | The founding members of the Joint Undertaking are the European Union represented by the Commission and the European Federation of Pharmaceutical Industries and Associations (EFPIA). |
| --- | --- |

2.

The founding members of the Joint Undertaking are the European Union represented by the Commission and the European Federation of Pharmaceutical Industries and Associations (EFPIA).

| 3. | The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines (see Table). |
| --- | --- |

3.

The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines (see Table).

| 4. | The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is one billion euro to be paid from the budget of the Seventh Research Framework Programme. The EU and EFPIA, as founding members, are to contribute equally to the running costs, each of them with an amount not exceeding 4 % of the total EU contribution. Other members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind contributions at least equal to the EU financial contribution. New members should also provide funding for research activities. |
| --- | --- |

4.

The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is one billion euro to be paid from the budget of the Seventh Research Framework Programme. The EU and EFPIA, as founding members, are to contribute equally to the running costs, each of them with an amount not exceeding 4 % of the total EU contribution. Other members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind contributions at least equal to the EU financial contribution. New members should also provide funding for research activities.

| 5. | The Joint Undertaking started to work autonomously on 16 November 2009. |
| --- | --- |

5.

The Joint Undertaking started to work autonomously on 16 November 2009.

15.

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| 15. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

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

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | The final budget included commitment appropriations of 82 million euro and payment appropriations of 82 million euro. As few project activities had started by the end of 2009, the budget for payments proved to be 97 %, the rate for payment appropriations was only 1 %. |
| --- | --- |

16.

The final budget included commitment appropriations of 82 million euro and payment appropriations of 82 million euro. As few project activities had started by the end of 2009, the budget for payments proved to be 97 %, the rate for payment appropriations was only 1 %.

Presentation of the accounts: members’ contributions

| 17. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
| --- | --- |

17.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 18. | The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts. |
| --- | --- |

18.

The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts.

| 19. | The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
| --- | --- |

19.

The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

Internal control systems

| 20. | The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information systems during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking. |
| --- | --- |

20.

The Joint Undertaking is in a start-up phase and has not completely implemented its internal controls and financial information systems during 2009. At the end of the year, the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Financial Rules of the Joint Undertaking.

| 21. | In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009. |
| --- | --- |

21.

In particular, further work is needed in the documentation of IT processes and activities, and the mapping of IT risks. The Joint Undertaking had also not developed a Business Continuity Plan nor a data protection policy in 2009.

Lack of host State agreement

| 22. | According to the Council Regulation setting up the IMI Joint Undertaking, a host agreement is to be concluded between the IMI Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, by the end of 2009, no such agreement had been made. |
| --- | --- |

22.

According to the Council Regulation setting up the IMI Joint Undertaking, a host agreement is to be concluded between the IMI Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to the Joint Undertaking. However, by the end of 2009, no such agreement had been made.

Internal Audit Function and Commission Internal Audit Service

| 23. | Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up. |
| --- | --- |

23.

Article 73 of the Financial Rules of the Joint Undertaking stipulates that the Joint Undertaking should have an internal auditing function which must comply with relevant international standards. However, at the end of 2009, this important element of the internal control system had not been set up.

| 24. | In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified. |
| --- | --- |

24.

In line with the views expressed in its Opinions No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking and No 2/2010 on the Financial Regulation of SESAR Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified.

| 25. | Article 10 of the Statutes of the IMI Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole. |
| --- | --- |

25.

Article 10 of the Statutes of the IMI Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Governing Board of the Joint Undertaking. Such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

Innovative Medicines Initiative Joint Undertaking (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Regulation (EC) No 73/2008 | Governance | Resources made available to the Joint Undertaking in 2009 | Main achievements for 2009 |
| --- | --- | --- | --- | --- |
| Treaty on the Functioning of the European Union

  Title XIX ‘Research and Technological Development and Space’.

  Article 187 (ex Article 171 EC) states:
  The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

  Article 188(1) (ex Article 172(1) EC) states:
  The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187. | Objectives

  Article 2 of Regulation (EC) No 73/2008 states:
  The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines. In particular it shall:






  (a) | support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcomethe identified research bottlenecks in the drug development process; |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Regulation (EC) No 73/2008

Governance

Resources made available to the Joint Undertaking in 2009

Main achievements for 2009

Treaty on the Functioning of the European Union

Title XIX ‘Research and Technological Development and Space’.

Article 187 (ex Article 171 EC) states:

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

Article 188(1) (ex Article 172(1) EC) states:

The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187.

Objectives

Article 2 of Regulation (EC) No 73/2008 states:

The IMI Joint Undertaking shall contribute to the implementation of the Seventh Framework Programme and in particular the Theme ‘Health’ of the Specific Programme Cooperation implementing the Seventh Framework Programme. It shall have the objective of significantly improving the efficiency and effectiveness of the drug development process with the long-term aim that the pharmaceutical sector produce more effective and safer innovative medicines. In particular it shall:

(a)

support ‘pre-competitive pharmaceutical research and development’ in the Member States and countries associated with the Seventh Framework Programme via a coordinated approach to overcomethe identified research bottlenecks in the drug development process;

| (b) | support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals; |
| --- | --- |

(b)

support the implementation of the research priorities as set out by the Research Agenda of the Joint Technology Initiative on Innovative Medicines (hereinafter referred to as ‘Research Activities’), notably by awarding grants following competitive calls for proposals;

| (c) | ensure complementarity with other activities of the Seventh Framework Programme; |
| --- | --- |

(c)

ensure complementarity with other activities of the Seventh Framework Programme;

| (d) | be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated to the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors; |
| --- | --- |

(d)

be a public-private partnership aiming at increasing the research investment in the biopharmaceutical sector in the Members States and countries associated to the Seventh Framework Programme by pooling resources and fostering collaboration between the public and private sectors;

| (e) | promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme. |
| --- | --- |

(e)

promote the involvement of small and medium-sized enterprises (SME) in its activities, in line with the objectives of the Seventh Framework Programme.

Tasks

Article 1 of the Statutes annexed to the Council Regulation states:

The main tasks and activities of the IMI Joint Undertaking shall be:

| (a) | to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’; |
| --- | --- |

(a)

to ensure the establishment and sustainable management of the Joint Technology Initiative on ‘Innovative Medicines’;

| (b) | to define and carry out the annual implementation plan referred to in Article 18 via calls for project; |
| --- | --- |

(b)

to define and carry out the annual implementation plan referred to in Article 18 via calls for project;

| (c) | to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in light of scientific developments occurring during its implementation; |
| --- | --- |

(c)

to regularly review and make any necessary adjustments to the Research Agenda of the Joint Technology Initiative on Innovative Medicines in light of scientific developments occurring during its implementation;

| (d) | to mobilise the public and private sector resources needed; |
| --- | --- |

(d)

to mobilise the public and private sector resources needed;

| (e) | to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients organisations, academia and clinical centres, as well as cooperation between industry and academia; |
| --- | --- |

(e)

to establish and develop close and long-term cooperation between the Union, industry and the other stakeholders such as regulatory bodies, patients organisations, academia and clinical centres, as well as cooperation between industry and academia;

| (f) | to facilitate coordination with national and international activities in this area; |
| --- | --- |

(f)

to facilitate coordination with national and international activities in this area;

| (g) | to undertake communication and dissemination activities; |
| --- | --- |

(g)

to undertake communication and dissemination activities;

| (h) | to communicate and interact with the Member States and the countries associated within the Seventh Framework Programme via the IMI States Representatives Group, specifically established for this purpose; |
| --- | --- |

(h)

to communicate and interact with the Member States and the countries associated within the Seventh Framework Programme via the IMI States Representatives Group, specifically established for this purpose;

| (i) | to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders; |
| --- | --- |

(i)

to organise at least an annual meeting (hereinafter referred to as a ‘Stakeholder Forum’) with interest groups to ensure openness and transparency of the Research Activities of the IMI Joint Undertaking with its stakeholders;

| (j) | to notify legal entities that have concluded a grant agreement with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme; |
| --- | --- |

(j)

to notify legal entities that have concluded a grant agreement with the IMI Joint Undertaking of the potential borrowing opportunities from the European Investment Bank, in particular the Risk Sharing Finance Facility set up under the Seventh Framework Programme;

| (k) | to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant; |
| --- | --- |

(k)

to publish information on the projects, including the name of the participants and the amount of the financial contribution of the IMI Joint Undertaking per participant;

| (l) | to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’; |
| --- | --- |

(l)

to ensure the efficiency of the Joint Technology Initiative on ‘Innovative Medicines’;

| (m) | to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation. |
| --- | --- |

(m)

to carry out any other activity needed to achieve the objectives referred to in Article 2 of the Regulation.

1 —   Governing Board

The Governing Board is the main decision-making body of the IMI JU and shall be responsible for the supervision of the Joint Undertaking in the pursuit of its objectives. It ensures close collaboration between the Joint Undertaking and its Members in the implementation of its activities. It therefore guarantees the fulfilment of the objectives set by the IMI JU, namely overcoming bottlenecks in European pharmaceutical R & D and supporting biomedical research for the benefit of patients.

2 —   Executive Director

The Executive Director — appointed by the Governing Board — shall be the chief executive responsible for the day-to-day management of the IMI Joint Undertaking in accordance with the decisions of the Governing Board. In that context, he/she shall regularly inform as well as respond to any specific ad hoc requests for information from the Governing Board and the Scientific Committee. The Executive Director shall be the legal representative of the IMI Joint Undertaking. He/she shall perform his/her tasks with complete independence, and shall be accountable to the Governing Board.

3 —   Scientific Committee

The Scientific Committee is an advisory body to the Governing Board and conducts its activities in close liaison with the support of the Executive Office.

The Scientific Committee shall advise on the Research Agenda on the scientific priorities for the annual implementation plan proposal and on the scientific achievements described in the annual activity report.

IMI JU is also supported by 2 external advisory bodies:

4 —   IMI States Representatives Group

The IMI States Representative Group consists of one representative of each Member State and of each country associated to the Framework Programme. It has an advisory role for the IMI Joint Undertaking and acts as an interface between the IMI Joint Undertaking and the relevant stakeholders within their respective countries.

5 —   Stakeholder Forum

The Stakeholder Forum is a meeting opened to all stakeholders to provide comments and convened at least once a year by the Executive Director.

6 —   External Audit

Court of Auditors.

7 —   Discharge Authority

Parliament on a recommendation of the Council.

Budget

81,9 million euro funded by Union contribution and 50 % of the running costs received form EFPIA (0,5 million euro)

Staff at 31 December 2009

29 posts in the annual establishment plan of which 12 occupied at 31.12.2009 and assigned to the following duties:

| — | Executive Director: 1, |
| --- | --- |

—

Executive Director: 1,

| — | scientific: 3, |
| --- | --- |

—

scientific: 3,

| — | operational tasks: 5, |
| --- | --- |

—

operational tasks: 5,

| — | administration tasks: 3. |
| --- | --- |

—

administration tasks: 3.

Set up of IMI Joint Undertaking and management

The Governing Board met 3 times.

The Scientific Committee also met 3 times.

The States Representatives Group met twice.

The IMI JU Executive Director, Michel Goldman, was appointed by the Governing Board on 10 June 2009 and took up his position on 16 September 2009. Until this date the interim Executive Director appointed by the European Commission, Alain Vanvossel, fulfilled the duties of Interim Executive Director.

The main task for 2009 was the preparatory actions necessary for the autonomy of the IMI JU granted on 16 November 2009.

These actions included in particular the recruitment of staff and setting up the IMI JU offices and procedures for administrative and operational actions.

With the autonomy the IMI JU had the operational capacity to implement its budget. Until this moment the European Commission (EC) was responsible for the establishment and the initial operations of the IMI JU in collaboration with the other Founding Member in accordance with Article 16 of the Council Regulation establishing the IMI JU.

Call for proposals and project management

The first call for proposals, launched in 2008 — was finalised and 15 project proposals selected in the two-stage call process with the assistance of independent experts. A majority of Grant Agreements was sent to the Project Coordinators for signature and 10 of them started by the end of the year.

IMI JU second call for proposals was launched on the 27 November 2009 with the deadline for the first stage in February 2010.

IT infrastructure

The IT infrastructure in the temporary IMI location was set up. It will be redesigned and a new set up will take place in the future premises.

The submission tool has been completely redesigned with a dedicated module publicly available for applicant consortia allowing the submission and evaluation of the expressions of interest (stage 1 of call for proposals).

Communication

Three major communication events took place during 2009. A press event was held on the 14 September for the presentation of the new Executive Director, and for presenting the topics for IMI’s second call for proposals.

An information-day was held on the 17 November informing o the second call to potential applicants.

An autonomy event took place on 15 December.

Source: Information submitted by the Joint Undertaking.

REPLIES OF THE JOINT UNDERTAKING

Implementation of the budget

Paragraph 16

IMI Joint Undertaking acknowledges the low implementation rate for payments in 2009, which was a consequence of the start-up phase of the Joint Undertaking.

Internal control systems

Paragraphs 20-21

IMI Joint Undertaking acknowledges the comments of the Court. The Joint Undertaking continues to develop its internal controls and is taking steps to address the issues raised by the Court.

Lack of host State agreement

Paragraph 22

IMI Joint Undertaking continues to cooperate for the implementation of the provisions of a host State agreement and awaits the outcome of the next steps of the procedure to have an agreement signed.

Internal Audit Function and Commission Internal Audit Service

Paragraph 23

An internal auditor is to be appointed with effect from November 2010.

---

(1)  Council Regulation (EC) No 73/2008 of 20 December 2007 setting up the Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (OJ L 30, 4.2.2008, p. 38).

1

(2)  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.

2

(3)  The financial statements include the balance sheet and the economic outturn account, as well as the description of the significant accounting policies and other explanatory information.

3

(4)  The budget implementation report comprises the budget outturn account and other explanatory information.

4

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

5

(6)  Financial Rules of the IMI Joint Undertaking adopted by Decision of its Governing Board on 2 February 2009.

6

(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 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 EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are incorporated in the Financial Rules of the IMI Joint Undertaking.

9

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

10

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| 16.12.2010 | EN | Official Journal of the European Union | C 342/22 |
| --- | --- | --- | --- |

16.12.2010

EN

Official Journal of the European Union

C 342/22

---

REPORT

on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/04

TABLE OF CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-4 | 23 |
| STATEMENT OF ASSURANCE ... | 5-14 | 23 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 15-18 | 24 |
| OTHER MATTERS ... | 19-33 | 24 |
| Table ... | 26 |
| Replies of the Joint Undertaking ... | 27 |

Paragraph

Page

INTRODUCTION ...

1-4

23

STATEMENT OF ASSURANCE ...

5-14

23

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

15-18

24

OTHER MATTERS ...

19-33

24

Table ...

26

Replies of the Joint Undertaking ...

27

INTRODUCTION

| 1. | The European Joint Undertaking for ITER (1) and the Development of Fusion Energy was set up in March 2007 (2) for a period of 35 years. While the main fusion facilities are to be developed at Cadarache in France, the Joint Undertaking is located in Barcelona. |
| --- | --- |

1.

The European Joint Undertaking for ITER (1) and the Development of Fusion Energy was set up in March 2007 (2) for a period of 35 years. While the main fusion facilities are to be developed at Cadarache in France, the Joint Undertaking is located in Barcelona.

| 2. | The Members of the Joint Undertaking are the European Atomic Energy Community (Euratom) represented by the European Commission, the Member States of Euratom and other countries which have concluded cooperation agreements with Euratom in the field of controlled nuclear fusion and have expressed their wish to become members (at 31 December 2009: Switzerland). |
| --- | --- |

2.

The Members of the Joint Undertaking are the European Atomic Energy Community (Euratom) represented by the European Commission, the Member States of Euratom and other countries which have concluded cooperation agreements with Euratom in the field of controlled nuclear fusion and have expressed their wish to become members (at 31 December 2009: Switzerland).

| 3. | The tasks of the Joint Undertaking are (see also Table):






  (a) | to provide the contribution of Euratom to the ITER International Fusion Energy Organisation (3); |
| --- | --- | --- |

3.

The tasks of the Joint Undertaking are (see also Table):

(a)

to provide the contribution of Euratom to the ITER International Fusion Energy Organisation (3);

| (b) | to provide the contribution of Euratom to the ‘Broader Approach Activities’ (complementary joint fusion research) with Japan for the rapid development of fusion energy; |
| --- | --- |

(b)

to provide the contribution of Euratom to the ‘Broader Approach Activities’ (complementary joint fusion research) with Japan for the rapid development of fusion energy;

| (c) | to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility. |
| --- | --- |

(c)

to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility.

| 4. | When the Joint Undertaking was set up, the indicative total resources deemed necessary for the period 2007 to 2041 were 9 653 million euro. The total contribution from Euratom was set at 7 649 million euro, of which a maximum of 15 % for administrative expenditure. Other resources consist of contributions from the ITER host State (France), the annual membership contributions, voluntary contributions from members other than Euratom, and additional resources to be received under terms approved by the Governing Board. The Court draws attention to the need for substantially increased resources for the ITER project (see paragraphs 31 to 33). |
| --- | --- |

4.

When the Joint Undertaking was set up, the indicative total resources deemed necessary for the period 2007 to 2041 were 9 653 million euro. The total contribution from Euratom was set at 7 649 million euro, of which a maximum of 15 % for administrative expenditure. Other resources consist of contributions from the ITER host State (France), the annual membership contributions, voluntary contributions from members other than Euratom, and additional resources to be received under terms approved by the Governing Board. The Court draws attention to the need for substantially increased resources for the ITER project (see paragraphs 31 to 33).

14.

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| --- |

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| --- |

| 14. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

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

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 15. | The final authorised payments budget for the Joint Undertaking for 2009 amounted to 173,6 million euro. The overall utilisation rate for payment appropriations was 65,3 %. Within this, the rate for operational expenditure was 65,5 % and for administrative expenditure it was 64,2 %. At the end of 2009, the Joint Undertaking had bank account deposits of 42 million euro. The underspending mostly relates to delays in the progress of the Euratom fusion programme, as was also noted by the Court in 2008. |
| --- | --- |

15.

The final authorised payments budget for the Joint Undertaking for 2009 amounted to 173,6 million euro. The overall utilisation rate for payment appropriations was 65,3 %. Within this, the rate for operational expenditure was 65,5 % and for administrative expenditure it was 64,2 %. At the end of 2009, the Joint Undertaking had bank account deposits of 42 million euro. The underspending mostly relates to delays in the progress of the Euratom fusion programme, as was also noted by the Court in 2008.

Presentation of the accounts: members’ contributions

| 16. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
| --- | --- |

16.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 17. | Unlike the other EU Joint Undertakings, the Joint Undertaking for ITER and the Development of Fusion Energy is entirely publicly funded. Thus the general provisions of EU Accounting Rule 1 (Group Accounting) on the presentation of members’ contributions under Net Assets in the Balance Sheet do not apply to the Joint Undertaking for ITER, where the contributions from members are presented under Operating Revenue in the Economic Outturn Account. |
| --- | --- |

17.

Unlike the other EU Joint Undertakings, the Joint Undertaking for ITER and the Development of Fusion Energy is entirely publicly funded. Thus the general provisions of EU Accounting Rule 1 (Group Accounting) on the presentation of members’ contributions under Net Assets in the Balance Sheet do not apply to the Joint Undertaking for ITER, where the contributions from members are presented under Operating Revenue in the Economic Outturn Account.

| 18. | While this accounting treatment is acceptable for the Joint Undertaking for ITER and the Development of Fusion Energy, the Court considers that, in general, the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
| --- | --- |

18.

While this accounting treatment is acceptable for the Joint Undertaking for ITER and the Development of Fusion Energy, the Court considers that, in general, the Accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

Internal control systems

| 19. | While recognising that the Joint Undertaking was in a start-up phase in 2008, the Court observed in its previous report that the Joint Undertaking had not completely implemented its internal controls and financial information system. |
| --- | --- |

19.

While recognising that the Joint Undertaking was in a start-up phase in 2008, the Court observed in its previous report that the Joint Undertaking had not completely implemented its internal controls and financial information system.

| 20. | Although the Joint Undertaking has taken action during 2009 to develop internal control standards, it remains the case that at the end of 2009, key activities of the organisation are not sufficiently formalised. An appropriate tool for the management of operational contracts was not in place. Budget implementation and reporting is based on the use of spreadsheets. There is no database to centralise operational, administrative and financial information. |
| --- | --- |

20.

Although the Joint Undertaking has taken action during 2009 to develop internal control standards, it remains the case that at the end of 2009, key activities of the organisation are not sufficiently formalised. An appropriate tool for the management of operational contracts was not in place. Budget implementation and reporting is based on the use of spreadsheets. There is no database to centralise operational, administrative and financial information.

| 21. | In April 2009, the departmental structure of the Joint Undertaking was reorganised. In the revised structure, the budget and accounting functions have been placed with the Procurements Department, which raises issues concerning the necessary separation of duties for financial and operational activities (see also paragraph 31). |
| --- | --- |

21.

In April 2009, the departmental structure of the Joint Undertaking was reorganised. In the revised structure, the budget and accounting functions have been placed with the Procurements Department, which raises issues concerning the necessary separation of duties for financial and operational activities (see also paragraph 31).

| 22. | As already observed in 2008, the underlying business processes have not been validated by the Accounting Officer as required by the Financial Regulation of the Joint Undertaking. |
| --- | --- |

22.

As already observed in 2008, the underlying business processes have not been validated by the Accounting Officer as required by the Financial Regulation of the Joint Undertaking.

| 23. | The Joint Undertaking put an internal auditing service in place in July 2009. However, the assessment of the management systems and of the efficiency of the internal control systems required by the Financial Regulation of the Joint Undertaking has not yet been undertaken. This assessment is especially important in view of the internal reorganisation made by the Joint Undertaking in 2009. |
| --- | --- |

23.

The Joint Undertaking put an internal auditing service in place in July 2009. However, the assessment of the management systems and of the efficiency of the internal control systems required by the Financial Regulation of the Joint Undertaking has not yet been undertaken. This assessment is especially important in view of the internal reorganisation made by the Joint Undertaking in 2009.

| 24. | The Court tested a sample of 31 transactions. In two cases, the Joint Undertaking made budget commitments only after it had already entered into legal obligations, contrary to the requirements of the Financial Regulation and in another two cases, there were insufficient supporting documents to attest the validation procedures carried out before making payments. |
| --- | --- |

24.

The Court tested a sample of 31 transactions. In two cases, the Joint Undertaking made budget commitments only after it had already entered into legal obligations, contrary to the requirements of the Financial Regulation and in another two cases, there were insufficient supporting documents to attest the validation procedures carried out before making payments.

| 25. | For one audited grant payment of 584 000 euro, the Court found that the officer authorising the payment only had delegated authority to authorise grant payments up to 200 000 euro. For an audited payment of more than 10 million euro in respect of site preparation works, the Court found evidence only of formal checks by the Joint Undertaking, which were not sufficient to provide assurance notably regarding the financial requirements of the grant agreement and the eligibility of costs. |
| --- | --- |

25.

For one audited grant payment of 584 000 euro, the Court found that the officer authorising the payment only had delegated authority to authorise grant payments up to 200 000 euro. For an audited payment of more than 10 million euro in respect of site preparation works, the Court found evidence only of formal checks by the Joint Undertaking, which were not sufficient to provide assurance notably regarding the financial requirements of the grant agreement and the eligibility of costs.

Late payment of membership contributions

| 26. | In 2008, the Court observed that a number of members of the Joint Undertaking did not pay their membership contributions within the deadline set by the Governing Board. |
| --- | --- |

26.

In 2008, the Court observed that a number of members of the Joint Undertaking did not pay their membership contributions within the deadline set by the Governing Board.

| 27. | For 2009, the expiry date for members to pay their annual contributions was 31 May 2009. Despite several reminders sent by the Joint Undertaking, at the year end two members had not yet paid their 2009 membership contributions. |
| --- | --- |

27.

For 2009, the expiry date for members to pay their annual contributions was 31 May 2009. Despite several reminders sent by the Joint Undertaking, at the year end two members had not yet paid their 2009 membership contributions.

Financial Regulation of the Joint Undertaking

| 28. | The Court noted a number of issues in 2008 for which it considered that amendments were required to the Financial Regulation of the Joint Undertaking in order to reinforce its financial framework (13). At the end of 2009, no amendments had been introduced to the Financial Regulation. |
| --- | --- |

28.

The Court noted a number of issues in 2008 for which it considered that amendments were required to the Financial Regulation of the Joint Undertaking in order to reinforce its financial framework (13). At the end of 2009, no amendments had been introduced to the Financial Regulation.

The role of the Internal Audit Service of the Commission

| 29. | The Court pointed out in its Opinion No 4/2008 that the Financial Regulation of the Joint Undertaking does not refer to the powers of the Commission’s internal auditor to perform audits of the Joint Undertaking. |
| --- | --- |

29.

The Court pointed out in its Opinion No 4/2008 that the Financial Regulation of the Joint Undertaking does not refer to the powers of the Commission’s internal auditor to perform audits of the Joint Undertaking.

| 30. | The Court reiterates that, according to the Framework Financial Regulation, as a general rule, the Commission’s internal auditor exercises the same powers with respect to EU bodies, including the Joint Undertakings, as with respect to Commission departments. |
| --- | --- |

30.

The Court reiterates that, according to the Framework Financial Regulation, as a general rule, the Commission’s internal auditor exercises the same powers with respect to EU bodies, including the Joint Undertakings, as with respect to Commission departments.

Status of the ITER project

| 31. | In May 2010, the Commission issued a communication to the European Parliament and the Council on the status of the ITER project (14). The Commission concludes that the substantial cost increases for ITER require a review of the governance of the Joint Undertaking, including its procurement policies, and the establishment of a sustainable financial framework. In particular, the Commission estimates that around 1,4 billion euro will be needed to meet the cost increases in the Euratom contribution to ITER in 2012 and 2013. |
| --- | --- |

31.

In May 2010, the Commission issued a communication to the European Parliament and the Council on the status of the ITER project (14). The Commission concludes that the substantial cost increases for ITER require a review of the governance of the Joint Undertaking, including its procurement policies, and the establishment of a sustainable financial framework. In particular, the Commission estimates that around 1,4 billion euro will be needed to meet the cost increases in the Euratom contribution to ITER in 2012 and 2013.

| 32. | While the Council confirmed its support to the ITER project at its meetings in November 2009 and July 2010, as at September 2010 both the Council and the European Parliament had yet to give their agreement to the additional funding required in 2012 and 2013 for the Euratom contribution to the ITER project. |
| --- | --- |

32.

While the Council confirmed its support to the ITER project at its meetings in November 2009 and July 2010, as at September 2010 both the Council and the European Parliament had yet to give their agreement to the additional funding required in 2012 and 2013 for the Euratom contribution to the ITER project.

| 33. | The Court notes that these developments may significantly affect the activities and the budget of the Joint Undertaking. |
| --- | --- |

33.

The Court notes that these developments may significantly affect the activities and the budget of the Joint Undertaking.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

The European Joint Undertaking for ITER and the Development of Fusion Energy (Barcelona)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Decision 2007/198/Euratom | Governance | Resources made available to the Joint Undertaking in 2009 | Main achievements for 2009 |
| --- | --- | --- | --- | --- |
| European Atomic Energy Community

  Chapter 5 on ‘Joint Undertakings’, of the Treaty establishing the European Atomic Energy Community, and in particular

  Article 45:


  ‘Undertakings which are of fundamental importance to the development of the nuclear industry in the Community may be established as Joint Undertakings within the meaning of this Treaty, in accordance with the following Articles’


  Article 49:


  ‘Joint Undertakings shall be established by Council decision. Each Joint Undertaking shall have legal personality.’ | Objectives







  — | to provide the contribution of the European Atomic Energy Community (Euratom) to the ITER International Fusion Energy Organisation, |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Decision 2007/198/Euratom

Governance

Resources made available to the Joint Undertaking in 2009

Main achievements for 2009

European Atomic Energy Community

Chapter 5 on ‘Joint Undertakings’, of the Treaty establishing the European Atomic Energy Community, and in particular

Article 45:

‘Undertakings which are of fundamental importance to the development of the nuclear industry in the Community may be established as Joint Undertakings within the meaning of this Treaty, in accordance with the following Articles’

Article 49:

Article 49:

‘Joint Undertakings shall be established by Council decision. Each Joint Undertaking shall have legal personality.’

Objectives

Objectives

—

to provide the contribution of the European Atomic Energy Community (Euratom) to the ITER International Fusion Energy Organisation,

| — | to provide the contribution of Euratom to Broader Approach Activities with Japan for the rapid realisation of fusion energy, |
| --- | --- |

—

to provide the contribution of Euratom to Broader Approach Activities with Japan for the rapid realisation of fusion energy,

| — | to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility (IFMIF). |
| --- | --- |

—

to prepare and coordinate a programme of activities in preparation for the construction of a demonstration fusion reactor and related facilities including the International Fusion Materials Irradiation Facility (IFMIF).

Tasks

Tasks

| — | oversee preparation of the ITER project site, |
| --- | --- |

—

oversee preparation of the ITER project site,

| — | provide components, equipment, materials and other resources to the ITER Organisation, |
| --- | --- |

—

provide components, equipment, materials and other resources to the ITER Organisation,

| — | manage procurement arrangements vis-à-vis the ITER Organisation and, in particular, associated quality assurance procedures, |
| --- | --- |

—

manage procurement arrangements vis-à-vis the ITER Organisation and, in particular, associated quality assurance procedures,

| — | prepare and coordinate Euratom’s participation in the scientific and technical exploitation of the ITER Project, |
| --- | --- |

—

prepare and coordinate Euratom’s participation in the scientific and technical exploitation of the ITER Project,

| — | coordinate scientific and technological research and development activities in support of Euratom’s contribution to the ITER Organisation, |
| --- | --- |

—

coordinate scientific and technological research and development activities in support of Euratom’s contribution to the ITER Organisation,

| — | provide Euratom’s financial contribution to the ITER Organisation, |
| --- | --- |

—

provide Euratom’s financial contribution to the ITER Organisation,

| — | arrange to make human resources available for the ITER Organisation, |
| --- | --- |

—

arrange to make human resources available for the ITER Organisation,

| — | interface with the ITER Organisation and carry out any other activities in furtherance of the ITER Agreement. |
| --- | --- |

—

interface with the ITER Organisation and carry out any other activities in furtherance of the ITER Agreement.

1 —   Governing Board

1 —

Governing Board

The Governing Board shall be responsible for the supervision of the Joint Undertaking in the pursuit of its objectives and ensure close collaboration between the Joint Undertaking and its Members in the implementation of its activities.

2 —   Executive Committee

2 —

Executive Committee

The Executive Committee shall assist the Governing Board in the preparation of its decisions and shall carry out any other tasks which the Governing Board may delegate to it.

3 —   Scientific Programme Board

3 —

Scientific Programme Board

The Scientific Programme Board shall advise the Governing Board and the Director, as necessary, on the adoption and implementation of the project plan and work programmes.

4 —   Director

4 —

Director

The Director shall be the chief executive officer responsible for the day-to-day management of the Joint Undertaking and shall be its legal representative.

5 —   External Audit

5 —

External Audit

Court of Auditors.

6 —   Internal Audit

6 —

Internal Audit

Established as of 1 July 2009.

7 —   Discharge Authority

7 —

Discharge Authority

Parliament on a recommendation of the Council.

Final budget for 2009

Final budget for 2009

173,61 million euro of which 80,6 % funded by Union contribution.

(149,8 million euro for 2008)

Staff at 31 December 2009

Staff at 31 December 2009

| — | 199 posts in the establishment plan of which 147 occupied at 31.12.2009 (153 including job offers done and accepted, of which 40 permanent and 113 temporary), |
| --- | --- |

—

199 posts in the establishment plan of which 147 occupied at 31.12.2009 (153 including job offers done and accepted, of which 40 permanent and 113 temporary),

| — | 66 other posts (contractual, seconded national experts), |
| --- | --- |

—

66 other posts (contractual, seconded national experts),

| — | total staff number: 213 (219 including job offers done and accepted). |
| --- | --- |

—

total staff number: 213 (219 including job offers done and accepted).

ITER and Broader Approach International Agreements

ITER and Broader Approach International Agreements

| — | Operational Contracts: 47 awarded for a total value of 142,5 million euro (51 launched), |
| --- | --- |

—

Operational Contracts: 47 awarded for a total value of 142,5 million euro (51 launched),

| — | Procurement Arrangements: 8 signed for the ITER Project (equivalent to 400 million euro), 3 signed for the Broader Approach Projects (equivalent to 19 million euro), |
| --- | --- |

—

Procurement Arrangements: 8 signed for the ITER Project (equivalent to 400 million euro), 3 signed for the Broader Approach Projects (equivalent to 19 million euro),

| — | ITER Credit Awarded to F4E: 2,92 kIUA (equivalent to 4,4 million euro), |
| --- | --- |

—

ITER Credit Awarded to F4E: 2,92 kIUA (equivalent to 4,4 million euro),

| — | Grants: 30 awarded for a total value of 15,9 million euro (30 launched), |
| --- | --- |

—

Grants: 30 awarded for a total value of 15,9 million euro (30 launched),

| — | Administrative Contracts: 5 awarded for a total value of 6 million euro (7 launched), |
| --- | --- |

—

Administrative Contracts: 5 awarded for a total value of 6 million euro (7 launched),

| — | Budget Implementation: 98,9 % in commitment appropriations, 65,3 % in payment appropriations, |
| --- | --- |

—

Budget Implementation: 98,9 % in commitment appropriations, 65,3 % in payment appropriations,

| — | Building up of the Organisation: 58 F4E Officials or Temporary Agents recruited as well as 34 Contract Agents, |
| --- | --- |

—

Building up of the Organisation: 58 F4E Officials or Temporary Agents recruited as well as 34 Contract Agents,

| — | Internal Audit and Data Protection functions established, |
| --- | --- |

—

Internal Audit and Data Protection functions established,

| — | Committees: 4 meetings of the Governing Board, 7 meetings of the Executive Committee and 3 meetings of the Technical Advisory Panel. |
| --- | --- |

—

Committees: 4 meetings of the Governing Board, 7 meetings of the Executive Committee and 3 meetings of the Technical Advisory Panel.

Source: Information submitted by the Joint Undertaking.

Source

REPLIES OF THE JOINT UNDERTAKING

Implementation of the budget

Paragraph 15

F4E agrees with the Court’s comments. An improved payment profile is being implemented for 2010 with more rigorous reporting and control mechanisms on budget execution for operational expenditure.

Presentation of the accounts: members’ contributions

Paragraphs 16 -18

F4E agrees with the observations of the Court which are statements relating to Joint Undertakings in general and address the intention of the Commission to issue detailed guidance on the presentation of members’ contributions in the annual accounts.

Internal control systems

Paragraph 19

F4E agrees with the Court’s comments and emphasises that the reinforcement of the control environment of the organisation remains one of its key priorities. However, it needs to be understood that developing, implementing and monitoring internal controls in a young, fast-growing organisation requires substantial time and resources, particularly while the organisation is seeking its most appropriate management arrangements.

Throughout 2009 and 2010, substantial progress has been achieved in the development of the non-financial control framework, especially concerning:

| — | job descriptions, |
| --- | --- |

—

job descriptions,

| — | ethical and organisational values, |
| --- | --- |

—

ethical and organisational values,

| — | staff evaluation and development, |
| --- | --- |

—

staff evaluation and development,

| — | processes and procedures, |
| --- | --- |

—

processes and procedures,

| — | business continuity, |
| --- | --- |

—

business continuity,

| — | document management, |
| --- | --- |

—

document management,

| — | internal audit. |
| --- | --- |

—

internal audit.

Paragraph 20

F4E agrees with the Court’s comments and is currently putting in place a contract management tool. F4E is also developing systematic budget tools covering budget preparation/implementation (with production of an automatic scoreboard) and reporting on budget and resources data.

Paragraphs 21 and 23

After the first months of the internal audit function were dedicated to consulting activities and capacity building, the first audit engagement, on financial circuits, started in November 2009 and was closed in May 2010. The Annual Audit Plan for 2009/2010 was adopted by the Director and endorsed by the Governing Board on 27 January 2010.

As concerns financial controls, the internal audit on the financial circuits of F4E already addresses a number of cross-cutting issues linked to financial management since the reorganisation carried out in April 2009. The concerns raised by the Court have been subject to an assessment in the light of this internal audit. In line with the recommendations of the Internal Auditor, an action plan has been established which, among others, aims at ensuring the necessary separation of duties for financial and operational activities. The implementation of this action plan has commenced in August 2010 and for the main parts should be completed by year end.

Paragraph 22

F4E agrees with the Court’s comments. The accounting systems have not been formally validated by the Accounting Officer as some of the underlying processes have not yet been formalised.

Paragraph 24

Due to budgetary constraints, F4E was not in a position to commit the total amount resulting from an agreement reached between the main actors of the ITER project. By the end of 2010, F4E should be able to commit the total amount of International Organisation contribution, as a result of the ITER Council Decision to be taken in November and further amendment of the 2010 F4E budget.

Paragraph 25

In relation to the grant which was audited, F4E agrees with the Court’s comments. The situation is now remedied with a higher, single ceiling defined in the delegation granted to the Authorising Officer by Delegation.

In relation to the audited payment in respect of site preparation works, F4E agrees with the Court’s comments. In general, F4E is planning to analyse and reflect on internal procedures which will amongst other things allow improving internal ex ante control.

Late payment of membership contributions

Paragraphs 26-27

F4E agrees with the Court’s comments. The situation has improved in 2010 due to greater anticipation and preventive measures. For 2011, F4E will further reinforce its early warning by sending the estimates of each member’s contribution for 2011. Members already received the information in April 2010 for their 2011 contributions and will receive a formal note with confirmation of the final amount after adoption of the 2011 budget by the Governing Board in November 2010.

Financial Regulation of the Joint Undertaking

Paragraph 28

F4E agrees with the Court’s comments. F4E considered that a sound and efficient approach was to gather a few years’ experience on the actual implementation of these rules before proposing a possible revision of the Financial Regulation. This revision should also be consistent with the possible proposal for the revision of the F4E Statutes (after Governing Board approval) and subsequent discussions with the Council. An internal working group has been set up and a proposal for revision of the F4E Financial Regulation should be submitted for adoption before the end of 2010.

The role of the Internal Audit Service of the Commission

Paragraphs 29-30

It is expected that the revision of the F4E Statutes will clarify the applicability of the Framework Financial Regulation with respect to internal audit of the Joint Undertaking. Notwithstanding this clarification, the proposal to amend the F4E Financial Regulation, which is currently under preparation, will already take into account the remark of the Court and existing general provisions empowering the Commission’s Internal Auditor to audit EU bodies.

Status of the ITER project

Paragraphs 31-33

F4E would like to emphasise that, while the information is correct, it represents the status of discussions in September 2010, following the publication by the Commission of a proposal for a decision of the European Parliament and of the Council amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework, to address additional financing needs of the ITER project (COM(2010) 403 of 20 July 2010).

---

(1)  ITER: International Thermonuclear Experimental Reactor.

1

(2)  Council Decision 2007/198/Euratom of 27 March 2007 establishing the European Joint Undertaking for ITER and the Development of Fusion Energy and conferring advantages upon it (OJ L 90, 30.3.2007, p. 58).

2

(3)  The ITER International Fusion Energy Organisation was set up in October 2007 for an initial period of 35 years to implement the ITER project, which aims to demonstrate the scientific and technological feasibility of fusion energy. The Members are Euratom, the People’s Republic of China, the Republic of India, Japan, the Republic of Korea, the Russian Federation and the United States of America.

3

(4)  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.

4

(5)  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.

5

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

6

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

7

(8)  Financial Regulation of the European Joint Undertaking for ITER and the Development of Fusion Energy adopted by Decision of its Governing Board on 22 October 2007.

8

(9)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 of 19 November 2002 (OJ L 357, 31.12.2002, p. 72).

9

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

10

(11)  The rules concerning the presentation of the accounts and accounting by EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.07.2008, p. 23) and are incorporated in the Financial Regulation of the European Joint Undertaking for ITER and the Development of Fusion Energy.

11

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

12

(13)  Opinion No 4/2008 on the Financial Regulation of the European Joint Undertaking for ITER and the Development of Fusion Energy (Fusion for Energy), and paragraphs 21 to 23 Court’s Report on the annual accounts of the European Joint Undertaking for ITER and the Development of Fusion Energy for the financial year ended 31 December 2008 (OJ C 310, 18.12.2009, p. 1).

13

(14)  Communication from the Commission to the European Parliament and the Council: ITER status and possible way forward (SEC(2010) 571 of 4 May 2010).

14

---

| 16.12.2010 | EN | Official Journal of the European Union | C 342/30 |
| --- | --- | --- | --- |

16.12.2010

EN

Official Journal of the European Union

C 342/30

---

REPORT

on the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2009, together with the replies of the Joint Undertaking

2010/C 342/05

TABLE OF CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION ... | 1-5 | 31 |
| STATEMENT OF ASSURANCE ... | 6-15 | 31 |
| COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ... | 16-22 | 32 |
| OTHER MATTERS ... | 23-32 | 32 |
| Table ... | 34 |
| Replies of the Joint Undertaking ... | 37 |

Paragraph

Page

INTRODUCTION ...

1-5

31

STATEMENT OF ASSURANCE ...

6-15

31

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT ...

16-22

32

OTHER MATTERS ...

23-32

32

Table ...

34

Replies of the Joint Undertaking ...

37

INTRODUCTION

| 1. | The SESAR Joint Undertaking was set up in February 2007 (1), located in Brussels, in order to manage the activities of the SESAR (Single European Sky Air Traffic Management Research) project. |
| --- | --- |

1.

The SESAR Joint Undertaking was set up in February 2007 (1), located in Brussels, in order to manage the activities of the SESAR (Single European Sky Air Traffic Management Research) project.

| 2. | The SESAR project aims to modernise air traffic management (ATM) in Europe and is divided into three phases.






  (a) | ‘Definition phase’ started in 2005 and led by the European Organisation for Safety of Air Navigation (Eurocontrol), with co-financing from the EU budget through the Trans-European Network — Transport programme. The outcome is the European ATM Master Plan, which defines the content, the development and deployment plans of the next generation of ATM systems. |
| --- | --- | --- |

2.

The SESAR project aims to modernise air traffic management (ATM) in Europe and is divided into three phases.

(a)

‘Definition phase’ started in 2005 and led by the European Organisation for Safety of Air Navigation (Eurocontrol), with co-financing from the EU budget through the Trans-European Network — Transport programme. The outcome is the European ATM Master Plan, which defines the content, the development and deployment plans of the next generation of ATM systems.

| (b) | ‘Development phase’ (2008-2013) managed by the SESAR Joint Undertaking (see also Table) and leading to the production of new technological systems, components and operational procedures as defined in the European ATM Master Plan. |
| --- | --- |

(b)

‘Development phase’ (2008-2013) managed by the SESAR Joint Undertaking (see also Table) and leading to the production of new technological systems, components and operational procedures as defined in the European ATM Master Plan.

| (c) | ‘Deployment phase’ (2014-2020) to be led by industry and stakeholders, for the large-scale production and implementation of the new air traffic management infrastructure. |
| --- | --- |

(c)

‘Deployment phase’ (2014-2020) to be led by industry and stakeholders, for the large-scale production and implementation of the new air traffic management infrastructure.

| 3. | The Joint Undertaking is designed as a public-private partnership. The founding members are the European Union represented by the European Commission, and Eurocontrol represented by its Agency. Following a call for expressions of interest, 15 public and private enterprises from the air navigation industry are members of the Joint Undertaking. These include air navigation service providers, ground and aerospace manufacturing industry, aircraft manufacturers, airport authorities and airborne equipment manufacturers. |
| --- | --- |

3.

The Joint Undertaking is designed as a public-private partnership. The founding members are the European Union represented by the European Commission, and Eurocontrol represented by its Agency. Following a call for expressions of interest, 15 public and private enterprises from the air navigation industry are members of the Joint Undertaking. These include air navigation service providers, ground and aerospace manufacturing industry, aircraft manufacturers, airport authorities and airborne equipment manufacturers.

| 4. | The budget for the development phase of the SESAR project is 2,1 billion euro, to be provided in equal parts by the EU, by Eurocontrol and by the participating public and private partners. The EU contribution is funded from the Seventh Research Framework Programme and the Trans-European Networks — Transport programme. Around 90 % of the funding from Eurocontrol and the other stakeholders will take the form of in-kind contributions. |
| --- | --- |

4.

The budget for the development phase of the SESAR project is 2,1 billion euro, to be provided in equal parts by the EU, by Eurocontrol and by the participating public and private partners. The EU contribution is funded from the Seventh Research Framework Programme and the Trans-European Networks — Transport programme. Around 90 % of the funding from Eurocontrol and the other stakeholders will take the form of in-kind contributions.

| 5. | The SESAR JU started to work autonomously on 10 August 2007. |
| --- | --- |

5.

The SESAR JU started to work autonomously on 10 August 2007.

15.

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| |
| --- |

| 15. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

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

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

| 16. | The final 2009 budget adopted by the Administrative Board included commitment appropriations of 325 million euro and payment appropriations of 157 million euro. The utilisation rates for commitment and payment appropriations were 97,1 % and 43,2 % respectively. |
| --- | --- |

16.

The final 2009 budget adopted by the Administrative Board included commitment appropriations of 325 million euro and payment appropriations of 157 million euro. The utilisation rates for commitment and payment appropriations were 97,1 % and 43,2 % respectively.

| 17. | In 2009, the contributions from members (38,8 million euro) together with the outturn of the previous year (115,6 million euro) amounted to 154,4 million euro, against payments of 67,9 million euro and carryover of appropriations of 2,5 million euro. This led to a positive budget outturn of 84 million euro and deposits in bank accounts at the end of the year totalling 86,8 million euro. This is at odds with the budgetary principle of equilibrium. |
| --- | --- |

17.

In 2009, the contributions from members (38,8 million euro) together with the outturn of the previous year (115,6 million euro) amounted to 154,4 million euro, against payments of 67,9 million euro and carryover of appropriations of 2,5 million euro. This led to a positive budget outturn of 84 million euro and deposits in bank accounts at the end of the year totalling 86,8 million euro. This is at odds with the budgetary principle of equilibrium.

| 18. | According to Article 51 of the SESAR Joint Undertaking Financial Rules, the funds paid to the Joint Undertaking by the Commission by way of the subsidy bear interest for the benefit of the EU general budget. At the end of 2009, the Joint Undertaking had not received a request to transfer the interest of 1,7 million euro accrued in the period 2007 to 2009. |
| --- | --- |

18.

According to Article 51 of the SESAR Joint Undertaking Financial Rules, the funds paid to the Joint Undertaking by the Commission by way of the subsidy bear interest for the benefit of the EU general budget. At the end of 2009, the Joint Undertaking had not received a request to transfer the interest of 1,7 million euro accrued in the period 2007 to 2009.

Presentation of the accounts: members’ contributions

| 19. | The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts. |
| --- | --- |

19.

The Court notes that the activities of the EU Joint Undertakings are funded by contributions from their members, and that the Joint Undertakings have no capital as such. The Court recommended that this specific feature of the Joint Undertakings is clearly disclosed in the accounts.

| 20. | The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts. |
| --- | --- |

20.

The Court therefore welcomes the fact that, in accordance with EU Accounting Rule 1 (Group Accounting), the contributions from members are presented under Net Assets in the Balance Sheets of the Joint Undertakings, and that further information on the nature of the contributions is provided in the Notes to the Accounts.

| 21. | This is a change to the accounting policy applied by the SESAR Joint Undertaking in the 2008 accounts, where the members’ contributions were recognised as revenue in the Economic Outturn Account. The relevant figures are restated in the 2008 accounts in order allow comparison with the 2009 accounts. |
| --- | --- |

21.

This is a change to the accounting policy applied by the SESAR Joint Undertaking in the 2008 accounts, where the members’ contributions were recognised as revenue in the Economic Outturn Account. The relevant figures are restated in the 2008 accounts in order allow comparison with the 2009 accounts.

| 22. | The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings. |
| --- | --- |

22.

The Court considers that the presentation of members’ contributions in the accounts of the Joint Undertakings should be harmonised as far as possible and notes the intention of the Commission to issue detailed guidance in this respect to the Joint Undertakings.

OTHER MATTERS

Internal control systems

| 23. | While recognising that the Joint Undertaking was in a start-up phase in 2008, the Court observed in its previous report that the Joint Undertaking had not completely implemented its internal controls and financial information system. |
| --- | --- |

23.

While recognising that the Joint Undertaking was in a start-up phase in 2008, the Court observed in its previous report that the Joint Undertaking had not completely implemented its internal controls and financial information system.

| 24. | Although important steps were taken during 2009 (11), it remains the case that at the end of 2009, key activities of the organisation are not sufficiently formalised and that an integrated tool to manage the financial, budget and operational information was not put in place. As already observed in 2008, the underlying business processes have not yet been validated by the Accounting Officer as required by the Financial Regulation of the Joint Undertaking. |
| --- | --- |

24.

Although important steps were taken during 2009 (11), it remains the case that at the end of 2009, key activities of the organisation are not sufficiently formalised and that an integrated tool to manage the financial, budget and operational information was not put in place. As already observed in 2008, the underlying business processes have not yet been validated by the Accounting Officer as required by the Financial Regulation of the Joint Undertaking.

| 25. | The Court’s testing of a sample of 36 transactions identified several cases where internal controls had not operated correctly. For example, in one case the Joint Undertaking concluded a contract for cleaning services for an annual value of 19 572 euro, without following the negotiated procedure laid down in the General Financial Regulation and the SESAR Financial Regulation. For another contract amounting to 922 000 euro for assistance in the preparation of membership agreements, the Court was able to obtain evidence that the services had been performed, but could not be provided with a formal statement of services rendered as required by the Financial Rules. |
| --- | --- |

25.

The Court’s testing of a sample of 36 transactions identified several cases where internal controls had not operated correctly. For example, in one case the Joint Undertaking concluded a contract for cleaning services for an annual value of 19 572 euro, without following the negotiated procedure laid down in the General Financial Regulation and the SESAR Financial Regulation. For another contract amounting to 922 000 euro for assistance in the preparation of membership agreements, the Court was able to obtain evidence that the services had been performed, but could not be provided with a formal statement of services rendered as required by the Financial Rules.

| 26. | According to Article 25 of the SESAR Financial Rules, budget appropriations are to be used in accordance with the principle of sound financial management. The contract for office space and facilities, signed on 6 September 2007 for a period of 9 years, included the possibility of early termination without penalty at the end of each 3-year period. However, the Joint Undertaking moved offices in 2009 and had to pay 380 235 euro for a further 12 months’ rent and charges for its vacated offices. |
| --- | --- |

26.

According to Article 25 of the SESAR Financial Rules, budget appropriations are to be used in accordance with the principle of sound financial management. The contract for office space and facilities, signed on 6 September 2007 for a period of 9 years, included the possibility of early termination without penalty at the end of each 3-year period. However, the Joint Undertaking moved offices in 2009 and had to pay 380 235 euro for a further 12 months’ rent and charges for its vacated offices.

Recognition of assets

| 27. | As regards of the results of the SESAR programme, the Joint Undertaking will own all the tangible and intangible assets which it creates or which are transferred to it for the development phase of the SESAR project in accordance with specific agreements with its members (12). |
| --- | --- |

27.

As regards of the results of the SESAR programme, the Joint Undertaking will own all the tangible and intangible assets which it creates or which are transferred to it for the development phase of the SESAR project in accordance with specific agreements with its members (12).

| 28. | As pointed out in the Annex to the Financial Statements, at this stage the SESAR Joint Undertaking is not able to forecast the activation of assets that might arise from the results of the activities. The Court notes that an integrated management information system to allow the allocation of costs to specific work packages or to identify the funding source of operational costs was not yet in place at the end of 2009. This is necessary to ensure the proper valuation of the costs of the activities and the activation of assets when required. |
| --- | --- |

28.

As pointed out in the Annex to the Financial Statements, at this stage the SESAR Joint Undertaking is not able to forecast the activation of assets that might arise from the results of the activities. The Court notes that an integrated management information system to allow the allocation of costs to specific work packages or to identify the funding source of operational costs was not yet in place at the end of 2009. This is necessary to ensure the proper valuation of the costs of the activities and the activation of assets when required.

Financial Regulation of the Joint Undertaking

| 29. | The Financial Rules of the Joint Undertaking were initially adopted by the Administrative Board in July 2007. In 2008, the Court (13) observed that the Financial Rules of the Joint Undertaking should be amended to be in line with the framework Financial Regulation for EU bodies. After the entry into force of Regulation (EC) No 1361/2008 amending Regulation (EC) No 219/2007, establishing the SESAR Joint Undertaking, the Administrative Board adopted on 28 July 2009 the current Financial Rules, repealing the Financial Rules adopted on July 2007. |
| --- | --- |

29.

The Financial Rules of the Joint Undertaking were initially adopted by the Administrative Board in July 2007. In 2008, the Court (13) observed that the Financial Rules of the Joint Undertaking should be amended to be in line with the framework Financial Regulation for EU bodies. After the entry into force of Regulation (EC) No 1361/2008 amending Regulation (EC) No 219/2007, establishing the SESAR Joint Undertaking, the Administrative Board adopted on 28 July 2009 the current Financial Rules, repealing the Financial Rules adopted on July 2007.

| 30. | The Court issued its Opinion No 2/2010 on the new Financial Rules of the SESAR Joint Undertaking on 15 April 2010. The Court made a number of recommendations, regarding exceptions to budgetary principles, the role of the Internal Audit Service of the Commission and the provisions concerning membership of the SESAR Joint Undertaking and co-financing of activities. |
| --- | --- |

30.

The Court issued its Opinion No 2/2010 on the new Financial Rules of the SESAR Joint Undertaking on 15 April 2010. The Court made a number of recommendations, regarding exceptions to budgetary principles, the role of the Internal Audit Service of the Commission and the provisions concerning membership of the SESAR Joint Undertaking and co-financing of activities.

Internal Audit Function and Commission Internal Audit Service

| 31. | As expressed in its Opinions No 2/2010 on the Financial Rules of SESAR Joint Undertaking and No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified. |
| --- | --- |

31.

As expressed in its Opinions No 2/2010 on the Financial Rules of SESAR Joint Undertaking and No 4/2008 on the Financial Regulation of the Fusion for Energy Joint Undertaking, the Court considers that the current provision in the Statutes of the Joint Undertaking on the role of the Commission’s internal auditor should be clarified.

| 32. | Article 7a of the Statutes of the SESAR Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Administrative Board of the Joint Undertaking. In the Courts opinion, such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole. |
| --- | --- |

32.

Article 7a of the Statutes of the SESAR Joint Undertaking states that the functions of the Commission’s internal auditor are to be carried out under the responsibility of the Administrative Board of the Joint Undertaking. In the Courts opinion, such an arrangement is appropriate for the internal auditing function within the Joint Undertaking but not for the Commission’s internal auditor, whose responsibilities relate to the general EU budget as a whole.

This report was adopted by Chamber II, headed by Mr Morten LEVYSOHN, Member of the Court of Auditors, in Luxembourg at its meeting of 20 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

SESAR Joint Undertaking (Brussels)

| Areas of Union competence deriving from the Treaty | Competences of the Joint Undertaking as defined in Regulation (EC) No 219/2007 as amended by Regulation (EC) No 1361/2008 | Governance | Resources made available to the Joint Undertaking in 2009 | Main products and services supplied in 2009 |
| --- | --- | --- | --- | --- |
| Common transport policy







  1. | The provisions of this Title shall apply to transport by rail, road and inland waterway. |

Areas of Union competence deriving from the Treaty

Competences of the Joint Undertaking as defined in Regulation (EC) No 219/2007 as amended by Regulation (EC) No 1361/2008

Governance

Resources made available to the Joint Undertaking in 2009

Main products and services supplied in 2009

Common transport policy

1.

The provisions of this Title shall apply to transport by rail, road and inland waterway.

| 2. | The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport. They shall act after consulting the Economic and Social Committee and the Committee of the Regions. |
| --- | --- |

2.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport. They shall act after consulting the Economic and Social Committee and the Committee of the Regions.

(Article 100 of the Treaty on the Functioning of the European Union)

Research and technological development

The Union may set up joint undertakings or any other structure necessary for the efficient execution of Union research, technological development and demonstration programmes.

(Article 187 of the Treaty on the Functioning of the European Union)

Objectives

| — | to ensure the modernisation of the European air traffic management system by coordinating and concentrating all relevant research and development efforts in the Union, |
| --- | --- |

—

to ensure the modernisation of the European air traffic management system by coordinating and concentrating all relevant research and development efforts in the Union,

| — | to execute the ATM Master Plan. |
| --- | --- |

—

to execute the ATM Master Plan.

Tasks

| — | manage the research, development and validation activities of the SESAR project by combining public and private sector funding provided by its members and using external technical resources and in particular by using Eurocontrol’s experience and expertise. |
| --- | --- |

—

manage the research, development and validation activities of the SESAR project by combining public and private sector funding provided by its members and using external technical resources and in particular by using Eurocontrol’s experience and expertise.

In particular

| — | organise and coordinating the activities of the development phase of the SESAR project, in accordance with the ATM Master Plan, resulting from the definition phase of the project managed by Eurocontrol, by combining and managing under a single structure public and private sector funding, |
| --- | --- |

—

organise and coordinating the activities of the development phase of the SESAR project, in accordance with the ATM Master Plan, resulting from the definition phase of the project managed by Eurocontrol, by combining and managing under a single structure public and private sector funding,

| — | ensure the necessary funding for the activities of the development phase of the SESAR project in accordance with the ATM Master Plan, |
| --- | --- |

—

ensure the necessary funding for the activities of the development phase of the SESAR project in accordance with the ATM Master Plan,

| — | ensure the involvement of the stakeholders of the air traffic management sector in Europe, in particular: air navigation service providers, airspace users, professional staff associations, airports, and manufacturing industry; as well as the relevant scientific institutions or the relevant scientific community, |
| --- | --- |

—

ensure the involvement of the stakeholders of the air traffic management sector in Europe, in particular: air navigation service providers, airspace users, professional staff associations, airports, and manufacturing industry; as well as the relevant scientific institutions or the relevant scientific community,

| — | organise the technical work of research and development, validation and study, to be carried out under its authority while avoiding fragmentation of such activities, |
| --- | --- |

—

organise the technical work of research and development, validation and study, to be carried out under its authority while avoiding fragmentation of such activities,

| — | ensure the supervision of activities related to the development of common products duly identified in the ATM Master Plan and if necessary, to organise specific invitations to tender. |
| --- | --- |

—

ensure the supervision of activities related to the development of common products duly identified in the ATM Master Plan and if necessary, to organise specific invitations to tender.

1 —   Administrative Board

Composition

| (a) | a representative from each of the members of the Joint Undertaking; |
| --- | --- |

(a)

a representative from each of the members of the Joint Undertaking;

| (b) | a representative of the military; |
| --- | --- |

(b)

a representative of the military;

| (c) | a representative of civil users of airspace; |
| --- | --- |

(c)

a representative of civil users of airspace;

| (d) | an air navigation service providers’ representative, designated by their representative organisation at European level; |
| --- | --- |

(d)

an air navigation service providers’ representative, designated by their representative organisation at European level;

| (e) | an equipment manufacturers’ representative, designated by their representative organisation at European level; |
| --- | --- |

(e)

an equipment manufacturers’ representative, designated by their representative organisation at European level;

| (f) | an airports’ representative; |
| --- | --- |

(f)

an airports’ representative;

| (g) | a representative from the bodies representing staff in the air traffic management sector, designated by their representative organisation at European level; |
| --- | --- |

(g)

a representative from the bodies representing staff in the air traffic management sector, designated by their representative organisation at European level;

| (h) | a representative of the relevant scientific institutions or the relevant scientific community, designated by their representative organisation at European level. |
| --- | --- |

(h)

a representative of the relevant scientific institutions or the relevant scientific community, designated by their representative organisation at European level.

The Administrative Board shall be chaired by the representative of the Union.

Main tasks

| (a) | adopt the ATM Master Plan endorsed by the Council as referred to in Article 1(2) of the SESAR Regulation and approve any proposal to modify it; |
| --- | --- |

(a)

adopt the ATM Master Plan endorsed by the Council as referred to in Article 1(2) of the SESAR Regulation and approve any proposal to modify it;

| (b) | give guidelines and take the decisions necessary for the implementation of the development phase of the SESAR project and exercise overall control over its implementation; |
| --- | --- |

(b)

give guidelines and take the decisions necessary for the implementation of the development phase of the SESAR project and exercise overall control over its implementation;

| (c) | approve the Joint Undertaking’s work programme and annual work programmes as well as the annual budget, including the staff establishment plan; |
| --- | --- |

(c)

approve the Joint Undertaking’s work programme and annual work programmes as well as the annual budget, including the staff establishment plan;

| (d) | authorise negotiations and decide on the accession of new members and on the relating agreements; |
| --- | --- |

(d)

authorise negotiations and decide on the accession of new members and on the relating agreements;

| (e) | supervise the execution of the agreements between members and the Joint Undertaking; |
| --- | --- |

(e)

supervise the execution of the agreements between members and the Joint Undertaking;

| (f) | appoint and dismiss the Executive Director and approve the organisation chart and monitoring the Executive Director’s performance; |
| --- | --- |

(f)

appoint and dismiss the Executive Director and approve the organisation chart and monitoring the Executive Director’s performance;

| (g) | decide on the amounts and procedures for the payment of members’ financial contributions and the assessment of contributions in kind; |
| --- | --- |

(g)

decide on the amounts and procedures for the payment of members’ financial contributions and the assessment of contributions in kind;

| (h) | adopt the financial regulations rules of the Joint Undertaking; |
| --- | --- |

(h)

adopt the financial regulations rules of the Joint Undertaking;

| (i) | approve the annual accounts and balance-sheet; |
| --- | --- |

(i)

approve the annual accounts and balance-sheet;

| (j) | adopt the annual report on the progress of the development phase of the SESAR project and its financial situation; |
| --- | --- |

(j)

adopt the annual report on the progress of the development phase of the SESAR project and its financial situation;

| (k) | decide on proposals to the Commission on the extension and the dissolution of the Joint Undertaking; |
| --- | --- |

(k)

decide on proposals to the Commission on the extension and the dissolution of the Joint Undertaking;

| (l) | establish procedures for granting rights of access to tangible and intangible assets which are the property of the Joint Undertaking and the transfer of such assets; |
| --- | --- |

(l)

establish procedures for granting rights of access to tangible and intangible assets which are the property of the Joint Undertaking and the transfer of such assets;

| (m) | lay down the rules and procedures for awarding the contracts necessary to implement the ATM Master Plan, including specific procedures for conflicts of interest; |
| --- | --- |

(m)

lay down the rules and procedures for awarding the contracts necessary to implement the ATM Master Plan, including specific procedures for conflicts of interest;

| (n) | decide on proposals to the Commission to amend the Statutes; |
| --- | --- |

(n)

decide on proposals to the Commission to amend the Statutes;

| (o) | exercise such other powers and perform such other functions, including the establishment of subsidiary bodies, as may be necessary for the purposes of the development phase of the SESAR project; |
| --- | --- |

(o)

exercise such other powers and perform such other functions, including the establishment of subsidiary bodies, as may be necessary for the purposes of the development phase of the SESAR project;

| (p) | adopt the arrangements for implementing Article 8 on the secondment of staff to the Joint Undertaking. |
| --- | --- |

(p)

adopt the arrangements for implementing Article 8 on the secondment of staff to the Joint Undertaking.

2 —   Executive Director

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

3 —   External Audit

Court of Auditors.

4 —   Discharge Authority

Parliament on a recommendation of the Council.

Budget

325,1 million euro Union contribution 16,9 %.

Staff at 31 December 2009

Posts in the staff establishment plan: 39

Post occupied: 18

Other posts (auxiliary contracts, seconded national experts, local staff): 8

Total staff number: 26

Staff seconded from the Joint Undertaking members as part of their in-kind contribution: 4

assigned to the following duties:

| — | operational tasks: 22, |
| --- | --- |

—

operational tasks: 22,

| — | administrative and support tasks: 16, |
| --- | --- |

—

administrative and support tasks: 16,

| — | mixed tasks: 1. |
| --- | --- |

—

mixed tasks: 1.

Main achievements in 2009:

| — | the Membership process was concluded on 26 March 2009 with the Administrative Board decision to award the membership to the 15 pre-selected candidate members together with the award of the activities included in the scope of IBAFO 1. The European Commission had previously (23 March 2009) received the position of EU Member States, following a comitology procedure as provided for pursuant to Article 5(4) of the SJU Regulation (EC) No 219/2007, |
| --- | --- |

—

the Membership process was concluded on 26 March 2009 with the Administrative Board decision to award the membership to the 15 pre-selected candidate members together with the award of the activities included in the scope of IBAFO 1. The European Commission had previously (23 March 2009) received the position of EU Member States, following a comitology procedure as provided for pursuant to Article 5(4) of the SJU Regulation (EC) No 219/2007,

| — | as at the moment of the launch of IBAFO 1 it was not possible to include all the Work Packages, inter alia, due to the need to have the final endorsement by the Provisional Council of the contribution of Eurocontrol to the SJU, a new IBAFO was launched in July 2009. The selection process was performed in November and the Executive Director presented its recommendation on the award of the activities to the SJU Administrative Board, who endorsed it, at its meeting on 14 December 2009, |
| --- | --- |

—

as at the moment of the launch of IBAFO 1 it was not possible to include all the Work Packages, inter alia, due to the need to have the final endorsement by the Provisional Council of the contribution of Eurocontrol to the SJU, a new IBAFO was launched in July 2009. The selection process was performed in November and the Executive Director presented its recommendation on the award of the activities to the SJU Administrative Board, who endorsed it, at its meeting on 14 December 2009,

| — | with the completion of the membership process as planned in 2009 and the process to award the programme activities, the SESAR programme has fully entered into operation, |
| --- | --- |

—

with the completion of the membership process as planned in 2009 and the process to award the programme activities, the SESAR programme has fully entered into operation,

| — | in line with the targets established in the AWP 2009, 69 % of the projects were initiated by the end of 2009. 126 R & D projects were kicked off; 62 Initiation Reports were received by the SJU by year end. 32 Initiation Reports were analysed out of which 13 projects were authorised by the Executive Director to start execution and 19 were considered as not fulfilling one or more of the acceptance criteria and a revised version was requested. 43 management activities were kicked off and following the submission of a Management Initiation Reports will be authorised to proceed to the execution phase at the beginning of 2010, |
| --- | --- |

—

in line with the targets established in the AWP 2009, 69 % of the projects were initiated by the end of 2009. 126 R & D projects were kicked off; 62 Initiation Reports were received by the SJU by year end. 32 Initiation Reports were analysed out of which 13 projects were authorised by the Executive Director to start execution and 19 were considered as not fulfilling one or more of the acceptance criteria and a revised version was requested. 43 management activities were kicked off and following the submission of a Management Initiation Reports will be authorised to proceed to the execution phase at the beginning of 2010,

| — | following the entry into force on 1 January 2009 of Regulation (EC) No 1361/2008, the SJU realised and completed the transition to a full European Union’s Body. As a result:






  (a) | new staff was recruited under the ‘Staff Regulations of Officials and Conditions of employment of other servants of the European Communities’ ’ as last modified by Council Regulation (EC, Euratom) No 31/2005 of 20 December 2004 (hereinafter the ‘Staff Regulations’); |
| --- | --- | --- |

—

following the entry into force on 1 January 2009 of Regulation (EC) No 1361/2008, the SJU realised and completed the transition to a full European Union’s Body. As a result:

(a)

new staff was recruited under the ‘Staff Regulations of Officials and Conditions of employment of other servants of the European Communities’ ’ as last modified by Council Regulation (EC, Euratom) No 31/2005 of 20 December 2004 (hereinafter the ‘Staff Regulations’);

| (b) | the 13 staff members in force at the beginning of 2009 were subject to an internal selection process in accordance with Article 2 of Regulation (EC) No 1361/2008 and were recruited as Temporary Agents under the Staff Regulations; |
| --- | --- |

(b)

the 13 staff members in force at the beginning of 2009 were subject to an internal selection process in accordance with Article 2 of Regulation (EC) No 1361/2008 and were recruited as Temporary Agents under the Staff Regulations;

| (c) | as of end of April 2009, the SJU has been in the position to recruit Contract Agents; |
| --- | --- |

(c)

as of end of April 2009, the SJU has been in the position to recruit Contract Agents;

| (d) | on 30 March 2009, in accordance with Article 2b of the SJU Regulations, the SJU signed an Administrative Agreement with the Belgian Government which implements the provisions of the Protocol on Privileges and Immunities of the European Communities. As a consequence of the application of the Protocol, the SJU has been declared exempted from VAT and started the process to recover the VAT paid between the 16 October 2008 until the entry into force of the Administrative Agreement, and the taxes on the interest yielded in the same period. By the end of 2009, the VAT (0,4 million euro) was recovered and cashed while the taxes on the interest will be cashed during 2010; |
| --- | --- |

(d)

on 30 March 2009, in accordance with Article 2b of the SJU Regulations, the SJU signed an Administrative Agreement with the Belgian Government which implements the provisions of the Protocol on Privileges and Immunities of the European Communities. As a consequence of the application of the Protocol, the SJU has been declared exempted from VAT and started the process to recover the VAT paid between the 16 October 2008 until the entry into force of the Administrative Agreement, and the taxes on the interest yielded in the same period. By the end of 2009, the VAT (0,4 million euro) was recovered and cashed while the taxes on the interest will be cashed during 2010;

| (e) | on 28 July 2009, the Administrative Board adopted the new SJU Financial Rules in accordance with Article 4a of the SJU Regulation, after having received the prior consent of the European Commission. The SJU Financial Rules should receive an opinion of the European Court of Auditors in 2010. |
| --- | --- |

(e)

on 28 July 2009, the Administrative Board adopted the new SJU Financial Rules in accordance with Article 4a of the SJU Regulation, after having received the prior consent of the European Commission. The SJU Financial Rules should receive an opinion of the European Court of Auditors in 2010.

2009 was a critical year of the SJU which had, on the one hand, to go through a 360 degrees restructuring process of its organisation due to the change of its Statutes and, on the other hand, to start operationally the activities with the launch of the projects, sub-work packages and work packages while still finalising the membership process.

Source: Information submitted by the Joint Undertaking.

REPLIES OF THE JOINT UNDERTAKING

Paragraph 17

The SESAR Joint Undertaking (SJU) is responsible for the development phase of the SESAR programme which is expected to last until 2016. The programme was launched in 2009. It is multiannual and will be characterised during its life by an expected imbalance between revenues and expenditure, particularly in its early years.

Paragraph 24

The SJU depends upon the European Commission (EC) services for the implementation of its financial systems, ABAC and SAP, which could not be implemented by the EC at SJU until May 2010. The SJU operational programme management system is effective since the end of 2009.

Paragraph 25

The contract for 19 572 euro was established and signed by the Temporary Administrator of the SJU in 2007, at a time where the SJU had no staff nor internal organisation. The SJU has launched in 2009 the correct procurement procedure to replace the contract.

The SJU acknowledges the Court’s finding that it should have been able to obtain better evidence to support the payment of 922 000 euro and it already ensures that formal statements of services rendered are available. However, the contract comprised support activities and professional legal advice to be charged on a time basis; these activities were performed on a continuous if not daily basis, in a very dense period of activity for the SJU (completion of negotiations with members) and were continuously monitored by the SJU. The outputs of the contract, such as draft membership and multilateral framework agreements, were worked on by SJU staff and support contractors in close and continuous cooperation, in particular through multiple exchanges of documents by email.

Paragraph 26

The SJU inherited the rental contract for the former premises of the Galileo Joint Undertaking in 2007 which were soon found to be inadequate for its needs, as agreed by the Administrative Board in 2008. The SJU, consequently, had to balance the risk of delaying the programme launch with the cost of moving to adequate premises. The SJU negotiated the contract for its new premises within its rental budget without the need to request additional resources from the Administrative Board.

Paragraph 28

The SJU acknowledges the Court’s concern but remains confident that it will be able to identify the funding source and costs necessary to activate assets at a proper value when required.

Paragraph 30

The SJU is undertaking the necessary measures together with the EC services to implement the recommendations contained in the Court’s Opinion No 2/2010.

Paragraph 31

The SJU will consider the necessity to amend its Statutes taking into account the opinion of the EC services.

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(1)  Council Regulation (EC) No 219/2007 of 27 February 2007 on the establishment of a Joint Undertaking to develop the new generation European air traffic management system (SESAR) (OJ L 64, 2.3.2007, p. 1) amended by Regulation (EC) No 1361/2008 of 16 December 2008 (OJ L 352, 31.12.2008, p. 12).

1

(2)  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.

2

(3)  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.

3

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

4

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

5

(6)  SESAR Financial Rules adopted by the Administrative Board on 28 July 2009.

6

(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 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 EU bodies are laid down in Chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are incorporated in the Financial Rules of the SESAR Joint Undertaking.

9

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

10

(11)  Including the entry into force of Council Regulation No 1361/2008 amending Regulation (EC) No 219/2007 and the adoption of new Financial Rules of the SESAR Joint Undertaking on 28 July 2009.

11

(12)  Article 18 of the Statutes.

12

(13)  Report on the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2008 (OJ C 310, 18.12.2009, p. 9).

13

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