OPINION 7. We have audited: (a) the accounts of the Joint Undertaking which comprise the financial statements (5) and the reports on the implementation of the budget (6) for the financial year ended 31 December 2017, and (b) the legality and regularity of the transactions underlying those accounts, as required by Article 287 of the Treaty on the Functioning of the European Union (TFEU). Opinion on the reliability of the accounts 8. In our opinion, the accounts of the Joint Undertaking for the year ended 31 December 2017 present fairly, in all material respects, the financial position of the Joint Undertaking at 31 December 2017, the results of its operations, its cash flows, and the changes in net assets for the year then ended, in accordance with its Financial Regulation and with accounting rules adopted by the Commission’s accounting officer. These are based on internationally-accepted accounting standards for the public sector. Opinion on the legality and regularity of revenue underlying the accounts 9. In our opinion, revenue underlying the accounts for the year ended 31 December 2017 is legal and regular in all material respects. Opinion on the legality and regularity of payments underlying the accounts 10. In our opinion, payments underlying the accounts for the year ended 31 December 2017 are legal and regular in all material respects. Emphasis of matter 11. Without calling into question the opinions expressed above, we wish to draw attention to the following. The EU Council conclusions adopted on 7 July 2010 ( 7 ) approved 6,6 billion euro (in 2008 values) for the Joint Undertaking’s contribution to the ITER construction phase of the project, with completion initially planned for 2020. This figure did not include the 663 million euro proposed by the European Commission in 2010 to cover potential contingencies ( 8 ) 12. In November 2016, the ITER Council ( 9 ) approved a new ITER project baseline (scope, schedule and cost). The overall project schedule ( 10 ) was approved by all ITER Members ( 11 ) , and the overall project cost was approved ad referendum, meaning that each Member had to seek approval for project costs through their respective government budget process. 13. The new schedule endorsed by the ITER Council set out a four-stage approach, making December 2025 the deadline for achieving the first strategic milestone of the project construction phase (‘First Plasma’) and December 2035 the estimated completion date for the whole construction phase, a delay of 15 years compared to the original baseline. The aim of the new staged approach is to better align the project implementation with the priorities and constraints of all ITER IO Members. 14. Following the approval of the new ITER project baseline, the F4E Joint Undertaking set the new timetable and recalculated the related cost at completion (‘EAC’) of the Joint Undertaking’s contribution to the project construction phase. 15. The results, which were presented to the Joint Undertaking’s Governing Board in December 2016, indicated an expected funding requirement for the construction phase after 2020 of 5,4 billion euro (in 2008 values) which represents 82 % increase in relation to the approved budget of 6,6 billion euro (in 2008 values). The amount of 6,6 billion euro (in 2008 values) adopted by the Council of the EU in 2010 now serves as a ceiling for the Joint Undertaking’s spending up to 2020. 16. It must be noted that, in addition to the construction phase, the Joint Undertaking will have to contribute to the ITER operational phase after 2035 ( 12 ) and to the subsequent ITER deactivation and decommissioning phases. The contribution to the operational phase after 2035 is not yet estimated. The contributions of the F4E Joint Undertaking to the deactivation and the decommissioning phases have been estimated by ITER IO in 95,54 million euro (in 2001 value) and in 180,2 million euro (in 2001 value) ( 13 ) respectively. 17. While the F4E Joint Undertaking’s forecasts for First Plasma are compatible with the ITER IO timetable for the project, the schedule is considered to be the earliest possible technically-achievable date ( 14 ) 18. In June 2017, the Commission issued a communication on the EU contribution to a reformed ITER project ( 15 ) , seeking the support of the European Parliament and a mandate from the Council of the EU for the Commission to approve the new baseline ( 16 ) on behalf of Euratom. 19. Even though the new baseline does not include a contingency, in its communication the Commission suggested that a contingency of up to 24 months in terms of schedule and 10-20 % in terms of budget would be appropriate ( 17 ) . In addition, the measures taken to respect the 6,6 billion euro capped budget included postponing the procurement and installation of all components not essential to First Plasma. While positive steps have been taken to improve the management and control of the ITER project construction phase, there remains a risk of further cost increases and delays in project implementation compared to the new proposed baseline. 20. On 29 March 2017, the United Kingdom notified the European Council of its decision to withdraw from the EU and Euratom. An agreement setting out the arrangements for its withdrawal will be negotiated. This may have a significant effect on the future activities of the F4E Joint Undertaking and the ITER project. Responsibilities of management and those in charge of governance 21. In accordance with Articles 310 to 325 of the TFEU and the Joint Undertaking’s Financial Regulation, management is responsible for the preparation and presentation of the accounts on the basis of internationally-accepted accounting standards for the public sector and for the legality and regularity of the transactions underlying them. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management is also responsible for ensuring that the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities which govern them. The Joint Undertaking’s management bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts. 22. In preparing the accounts, management is responsible for assessing the Joint Undertaking’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. 23. Those in charge of governance are responsible for overseeing the entity’s financial reporting process. Auditor’s responsibilities for the audit of the accounts and underlying transactions 24. Our objectives are to obtain reasonable assurance about whether the accounts of the Joint Undertaking are free from material misstatement and the transactions underlying them are legal and regular and, on the basis of our audit, to provide the European Parliament and the Council or other respective discharge authorities with a statement of assurance as to the reliability of the accounts and the legality and regularity of the transactions underlying them. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit will always detect a material misstatement or non-compliance when it exists. These can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these accounts. 25. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and the regularity of the transactions underlying them. The procedures selected depend on the auditor’s judgment, including an assessment of the risks of material misstatement of the accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In making those risk assessments, internal control relevant to the preparation and fair presentation of the accounts and legality and regularity of underlying transactions is considered in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. An audit also includes evaluating the appropriateness of accounting policies used, the reasonableness of accounting estimates made by the management and the overall presentation of the accounts. 26. For revenue, we verify the subsidy received from the Commission and other stakeholders and assess the Joint Undertaking’s procedures for collecting fees and other income. 27. For expenditure, we examine payment transactions when expenditure has been incurred, recorded and accepted. This examination covers all categories of payments (including those made for the purchase of assets) other than advances at the point they are made. Advance payments are examined when the recipient of funds provides justification for their proper use and the Joint Undertaking accepts the justification by clearing the advance payment, whether in the same year or later. 28. In preparing this report and Opinion, we considered the audit work of the independent external auditor performed on the Joint Undertaking’s accounts as stipulated in Article 208(4) of the EU Financial Regulation ( 18 )