EN Official Journal of the European Union C 442/1

Summary of the results of the Court’s 2013 annual audits of the European Agencies and other bodies

(2014/C 442/01)

CONTENTS

Paragraph Page Introduction 1 — 5 2 Information in support of the Court’s opinions 6 2 Audit results 7 — 20 2 Opinions on the reliability of the accounts 7 — 8 2 Opinions on the legality and regularity of the transactions underlying the accounts 9 — 11 3 Comments not calling the Court’s opinions into question 12 — 20 3 Comments on the reliability of accounts 14 4 Comments on the legality and regularity of transactions 15 4 Comments on internal controls 16 4 Comments on budget implementation 17 — 18 4 Other comments 19 4 Follow-up of previous years’ comments 20 4 Conclusions 21 — 23 4 ANNEX I — Agencies’ income (budget forecasts, entitlements established and amounts received) and staff establishment plans 6 ANNEX II — Comments made by the Court in 2013, not calling its opinion into question 11 ANNEX III — Follow-up of open 2011 and 2012 comments not calling the Court’s opinions into question 15

INTRODUCTION

1. Pursuant to the provisions of Article 287 of the Treaty on the functioning of the European Union, the Court has audited the annual accounts (1) for the financial year ended 31 December 2013 and the legality and regularity of the transactions underlying them for 32 decentralised agencies (2), 6 executive agencies, the Euratom Supply Agency (Euratom), the European Institute of Innovation and Technology (EIT) and the Europol Pension Fund (hereinafter ‘agencies’). Details on the audited agencies, their budgets and staff are provided in Annex I.

2. This summary provides an overview of the results of the Court’s annual audits of the agencies for the financial year 2013. It aims to facilitate analysis and comparison of the Court’s 41 specific reports on the 2013 annual accounts of the agencies. The Court’s opinions and comments as well as the agencies’ replies can be found in these specific reports. This summary is not an audit report or opinion.

3. Decentralised agencies play an important role in implementing EU policies, especially tasks of a technical, scientific, operational and/or regulatory nature. Their aim is to allow the Commission to concentrate on policymaking and to reinforce cooperation between the EU and national governments by pooling technical and specialist expertise from both sides. They are located throughout the EU. Executive agencies assist the Commission in the implementation of Union spending programmes. They are set up for a fixed period and based in the same location as the Commission.

4. The agencies’ 2013 budget amounted to some 2 billion euro (2012: EUR 1,6 billion euro), i.e. about 1,4 % of the EU general budget (2012: 1,2 %). Approximately 1 billion euro comes from the European Commission’s subsidies and the rest is income from fees and other sources. The agencies employ some 6 500 (2012: 6 100) permanent and temporary officials, i.e. 14 % (2012: 13 %) of the total number of EU officials authorised under the EU general budget (staff establishment plan). In addition, some 2 900 other staff are working for the agencies (contract or seconded staff).

5. Whereas financial risk related to the agencies is relatively low compared to the total EU budget, the reputational risk for the Union is high: they are highly visible in the Member States and they have significant influence on policy- and decision-making and programme implementation in areas of vital importance to European citizens, i.e. health, safety, security, freedom and justice.

INFORMATION IN SUPPORT OF THE COURT’S OPINIONS

6. The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of the agencies’ internal controls. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. In order to consider the particular risks involved, the 2013 audit placed special emphasis on the legality and regularity of grant transactions (in the 11 agencies concerned, see Annex II) and related internal controls. The audit of recruitment procedures focused on a follow-up of previous years’ findings.

AUDIT RESULTS

Opinions on the reliability of the accounts

7. The final accounts of all agencies present fairly, in all material respects, their financial position as at 31 December 2013 and the results of their operations and their cash flows for the year then ended, in accordance with the provisions of the applicable Financial Regulations and the accounting rules adopted by the Commission’s Accounting Officer.

8. Without calling into question its opinion expressed for eu-LISA, the Court’s emphasis of matter (3) paragraph draws attention to the valuation of the Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (systems) in the Agency’s accounts. The operational management of these systems was transferred to the Agency from the Commission in May 2013 by way of a non-exchange transaction and is the core task of the Agency. In the absence of reliable and complete information in respect of their total development cost, they are recorded in the Agency’s accounts at their net book values as per the Commission’s books and updated at year end. These values relate mainly to hardware and off-the-shelf software components and do not include software development costs.

Opinions on the legality and regularity of the transactions underlying the accounts

9. As was the case last year, the Court concluded that the transactions underlying the annual accounts for the year ended 31 December 2013 were legal and regular in all material respects for all agencies except EIT and Frontex (European Agency for the Management of Operational Cooperation at the External Borders).

10. A qualified opinion (4) was issued for EIT. Despite further improvements in the Institute’s ex ante and ex post verifications, a material, but not pervasive level of error was found in relation to the legality and regularity of grant transactions and to procurements.

11. The Court also issued a qualified opinion for Frontex. There is still insufficient audit evidence on the legality and regularity of grant transactions. Despite the introduction of more comprehensive ex ante verifications for grant agreements signed since June 2013, the majority of 2013 transactions resulted from grant agreements signed before that date. The possible effects are material but no longer pervasive, as was the case last year (5).

Comments not calling the Court’s opinions into question

12. Without calling its opinions into question, the Court made a total of 97 (2012: 123) comments affecting 35 agencies to highlight matters of importance and to indicate room for improvement. Comments were made regarding the reliability of accounts, the legality and regularity of transactions, internal controls, budget implementation and other matters such as sound financial management. Having audited recruitment procedures in detail for several years, the 2013 audit was a follow-up of previous years’ findings in this area (hence the decrease in the number of comments) (6).

Chart 1

Number of comments by heading

Source: Specific reports on the agencies’ 2013 annual accounts.

13. An overview of the comments made for each of the agencies is provided in Annex II. A summary of the most frequent comments is provided below.

Comments on the reliability of accounts

14. Four comments were made in relation to four agencies and addressed weaknesses in the recording of accruals, the completeness of notes to the financial statements, the accounting of fixed assets and the reconciliation of suppliers’ statements at year-end. (Last year, five of the seven comments made related to non-validated accounting systems which have since been validated by the agencies’ accountants.)

Comments on the legality and regularity of transactions

15. The seven comments concern seven agencies. Six of them relate to weaknesses in procurement procedures in areas such as transparency of the outsourcing procedures, consistency between contract notice and tender specifications, the consistent application of eligibility/selection criteria, and the extension of framework contracts. Last year, the same number of comments was made on procurement procedures.

Comments on internal controls

16. The 17 comments (2012: 34) concern 10 agencies (2012: 22). In four cases (2012: five) they related to weaknesses in the implementation of internal control standards, either because they had not been adopted at year-end or they were adopted but only partially implemented, or corrective action was still ongoing. A positive development is the decrease in comments made on fixed assets management (from seven in 2012 to two in 2013) and grant management (from five in 2012 to two in 2013).

Comments on budget implementation

17. A high level of carry-overs of committed appropriations remains the most frequent comment in this area and concerned 24 (2012: 26) agencies. Although a high level of carry-overs is usually considered to be at odds with the budgetary principle of annuality and can indicate weaknesses in budget planning and implementation, it often resulted from events (partly) beyond the agencies’ control (e.g. invoices or cost declarations that had not been received by the year-end) or were justified by the multiannual nature of operations, procurement procedures or projects.

18. High levels of cancellations of carry-overs from previous years were noted in seven cases (2012: nine). Such cancellations indicate that the appropriations carried over were made on the basis of overestimated needs or were otherwise not justified.

Other comments

19. There were 22 (2012: 27) other comments which concerned 15 agencies (2012: 20). Six related to the absence of headquarter agreements with agencies’ host countries and 11 were to matters of sound financial management, for example: — the level of stand-by duty allowances paid, — agencies in multiple locations (even within the same Member State): it is likely that administrative costs could be reduced if all staff were centralised, — cash balances in a number of agencies were higher than justified by operational requirements (506 million euro in total).

Follow-up of previous years’ comments

20. Annex III shows that for the 192 open comments at the end of 2012, in 2013 corrective action was completed in 94 cases, ongoing in 47 and outstanding in five cases (no corrective action was required for 46 comments, mainly in relation to budget carry-overs).

CONCLUSIONS

21. All agencies prepared their accounts in accordance with the provisions of the applicable Financial Regulations and the accounting rules adopted by the Commission’s Accounting Officer.

22. The Court concluded that transactions underlying the accounts were legal and regular for all except two agencies. Qualified opinions were issued for EIT and Frontex (mainly in relation to grant transactions).

23. Agencies further improved their procedures by taking corrective action in response to the Court’s comments from previous years. Nevertheless, there is considerable room for improvement, as indicated by the high number of comments made in respect of 2013.

(1) These comprise the ‘financial statements’ and the ‘reports on the implementation of the budget’.

(2) The European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA) was granted financial autonomy by the Commission on 22 May 2013 and was audited by the Court for the first time in 2013.

(3) An Emphasis of Matter paragraph is used to draw readers’ attention to a matter which is not materially misstated in the accounts, but is of such importance that it is fundamental to users’ understanding of the accounts.

(4) The Court expresses a qualified opinion when the auditor has obtained sufficient appropriate audit evidence and concludes that misstatements or instances of non-compliance are material, but not pervasive, to the annual accounts or underlying transactions (as outlined in paragraph 10). The Court also expresses a qualified opinion when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the possible effects on the annual accounts or underlying transactions of that inability are material but not pervasive (as outlined in paragraph 11).

(5) The Court gave a disclaimer of opinion for the financial year 2012.

(6) In 2013, the Court made 3 recruitment-related comments (2012: 17).

ANNEX I Agencies' income (budget forecasts, entitlements established and amounts received) and staff establishment plans 2013 2012 Agency Parent DG Policy Area Forecasted income budget (2) (million euro) Change of forecasted Income budget 2013 vs 2012 Entitlements established (2) (million euro) Amounts received (2) (million euro) Staff establishment plan (3) Change of establishment plan 2013 vs 2012 Forecasted income budget (4) (million euro) Entitlements established (4) (million euro) Amounts received (4) (million euro) Staff establishment plan (3) Decentralised Agencies European Medicines Agency — EMA SANCO Health and Consumer 252 14 % 269 240 611 4 % 222 254 224 590 Office for Harmonization in the Internal Market — OHIM MARKT Internal Market and Services 418 -3 % 189 189 861 11 % 429 176 176 775 European Aviation Safety Agency — EASA MOVE Mobility and Transport 151 1 % 125 125 692 9 % 150 116 115 634 European Agency for the Management of Operational Cooperation at the External Borders — Frontex HOME Home Affairs 94 4 % 92 92 153 7 % 90 76 76 143 European Police Office — Europol HOME Home Affairs 83 -1 % 83 83 457 0 % 84 83 83 457 European Food Safety Authority — EFSA SANCO Health and Consumer 76 -1 % 76 76 351 -1 % 77 77 77 355 European Maritime Safety Agency — EMSA MOVE Mobility and Transport 57 -3 % 58 56 213 0 % 59 54 53 213 European Centre for Disease Prevention and Control — ECDC SANCO Health and Consumer 58 0 % 59 59 198 -1 % 58 58 58 200 Translation Centre for the Bodies of the European Union — CdT DGT Translation 52 8 % 54 50 206 -6 % 48 49 45 220 European Environment Agency — EEA ENV Environment 49 17 % 63 63 138 1 % 42 52 51 136 European Body for the Enhancement of Judicial Cooperation — Eurojust JUST Justice 32 -3 % 32 32 213 0 % 33 33 33 213 European Chemicals Agency — ECHA ENTR Enterprise and Industry 99 200 % 98 98 503 7 % 33 35 35 470 European Railway Agency — ERA MOVE Mobility and Transport 26 0 % 26 26 143 -1 % 26 26 26 144 European Union Agency for Fundamental Rights — FRA JUST Justice 22 5 % 22 22 78 4 % 21 21 21 75 European Banking Authority — EBA MARKT Internal Market and Services 26 24 % 26 26 93 37 % 21 19 19 68 European foundation for the improvement of living & working conditions — Eurofound EMPL Internal Market and Services 21 0 % 21 21 101 0 % 21 21 21 101 European Training Foundation — ETF EAC Education and Culture 20 -5 % 22 22 96 0 % 21 20 20 96 European Securities and Markets Authority — ESMA MARKT Internal Market and Services 28 40 % 30 30 121 61 % 20 19 19 75 European Centre for the Development of Vocational Training — Cedefop EAC Education and Culture 19 0 % 18 18 100 -1 % 19 20 20 101 European Insurance and Occupational Pensions Authority — EIOPA MARKT Internal Market and Services 19 19 % 18 18 80 16 % 16 14 14 69 European Monitoring Centre for Drugs and Drug Addiction — EMCDDA HOME Home Affairs 16 0 % 16 16 84 0 % 16 16 16 84 European Agency for Safety and Health at Work — EU-OSHA EMPL Internal Market and Services 15 0 % 16 16 44 0 % 15 15 15 44 Community Plant Variety Office — CPVO SANCO Health and Consumer 14 8 % 13 13 48 4 % 13 13 13 46 European GNSS Agency — GSA ENTR Enterprise and Industry 14 8 % 54 54 77 75 % 13 21 21 44 European Fisheries Control Agency — EFCA MARE Maritime Affairs & Fisheries 9 -10 % 9 9 54 0 % 10 10 10 54 European Institute for Gender equality— EIGE JUST Justice 7 -13 % 8 8 30 0 % 8 8 8 30 European Police College — CEPOL HOME Home Affairs 8 0 % 9 9 28 0 % 8 9 9 28 European Union Agency for Network and Information Security — ENISA CONNECT Communication Networks, Content and Technology 10 25 % 10 9 47 0 % 8 8 8 47 Agency for the Cooperation of Energy Regulators — ACER ENER Energy 12 71 % 12 12 49 14 % 7 7 7 43 European Asylum Support Office — EASO HOME Home Affairs 11 57 % 10 10 45 18 % 7 2 2 38 Office of the Body of European Regulators for Electronic Communications — BEREC CONNECT Communication Networks, Content and Technology 4 33 % 4 4 16 0 % 3 3 3 16 European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice — eu-LISA HOME Home Affairs 34 19 19 120 financially autonomous from 2013 n/a n/a n/a n/a Executive Agencies Education, Audiovisual and Culture Executive Agency — EACEA EAC Education and Culture 51 2 % 52 52 105 2 % 50 50 50 103 Research Executive Agency — REA RTD Research and Innovation 47 2 % 47 47 140 9 % 46 47 47 128 European Research Council Executive Agency — ERCEA RTD Research and Innovation 40 3 % 40 40 100 0 % 39 39 39 100 Executive Agency for Competitiveness and Innovation — EACI ENER Energy 16 0 % 16 16 37 0 % 16 17 17 37 Trans-European Transport Network Executive Agency — TEN-T EA MOVE Mobility and Transport 10 0 % 10 10 33 0 % 10 10 10 33 Executive Agency for Health and Consumers — EAHC SANCO Health and Consumer 7 0 % 7 7 12 0 % 7 7 7 12 Other Bodies European Institute of Innovation and Technology — EIT EAC Education and Culture 99 27 % 97 97 34 21 % 78 77 77 28 Euratom Supply Agency (1) — Euratom ENER & RTD Energy & Research and Innovation 0,1 0 % 0,1 0,1 25 0 % 0,1 0,1 0,1 25 Europol Pension Fund — EPF HOME Administrative Expenditure of Europol n/a n/a n/a n/a n/a n/a n/a n/a Total 2 026 10 % 1 830 1 794 6 536 8 % 1 844 1 582 1 545 6 075 2013 2012 Commission subsidy part in agencies’ income: 51,9 % 64,0 % Agencies’ forecasted income budget in comparison with EU general budget: 1,4 % 1,4 % Agencies’ staff stablishment plan in comparison with total under the EU general budget: 14,0 % 13,1 % (1) Euratom Supply Agency is not consolidated in the EU annual accounts. (2) According to 2013 provisional consolidated EU annual accounts. (3) Permanent and temporary EU officials (AD and AST) only, according to staff establishment plan. In addition, some 2 880 staff are working for EU agencies on the basis of temporary or secondment contracts. (4) According to 2012 final consolidated EU annual accounts (adjusted for OHIM).

ANNEX II Comments made by the Court in 2013, not calling its opinion into question Total No of comments Reliability of accounts Legality/Regularity of Transactions Internal Controls Budget Implementation Other comments Weaknesses in procurement procedures Other ICS not fully implemented Weak controls over fixed assets/stock taking Weak grant controls Other High carry-overs High budget transfers High cancellations of 2012 carry-overs Insufficient commitments Other Recruitment SFM No headquarters agreement with MS Other 1 ACER — Ljubljana 3 X X X 2 BEREC — Riga 2 X X 3 CdT — Luxembourg 4 X X X X 4 Cedefop — Thessaloniki (1) 0 5 CEPOL — Bramshill (1) 3 X X X 6 EFCA — Vigo 1 X 7 CPVO — Angers 1 X 8 EACEA — Brussels 1 X 9 EACI — Brussels 1 X 10 EAHC — Luxembourg 3 X X X 11 EASA — Cologne 3 X X X 12 EASO — Valletta (1) 6 X X X X X X 13 EBA — London 2 X X 14 ECDC — Stockholm (1) 4 X X X X 15 ECHA — Helsinki 2 X X 16 EEA — Copenhagen (1) 1 X 17 EFSA — Parma (1) 3 X X X 18 EIGE — Vilnius 1 X 19 EIOPA — Frankfurt 4 X XX X 20 EIT — Budapest (1) 4 X X X X 21 EMA — London 0 22 EMCDDA — Lisbon (1) 1 X 23 EMSA — Lisbon 0 24 ENISA — Heraklion 4 X X XX 25 ERA — Valenciennes 5 X X X X X 26 ERCEA — Brussels 0 27 ESMA — Paris 4 X X XX 28 ETF — Turin 1 X 29 eu-LISA — Tallinn 8 X X XXXX X X 30 EU-OSHA — Bilbao 1 X 31 Euratom — Luxembourg 2 X X 32 Eurofound — Dublin 4 X X X X 33 Eurojust — The Hague (1) 2 X X 34 Europol — The Hague 2 X X 35 EPF — The Hague 0 36 FRA — Vienna 1 X 37 Frontex — Warsaw (1) 5 X X X X X 38 GSA — Prague (1) 2 X X 39 OHIM — Alicante 3 X X X 40 REA — Brussels 0 41 TEN-T EA — Brussels 3 XX X Subtotals: 97 4 6 1 4 2 2 9 24 3 7 6 7 3 11 6 2 Totals: 4 7 17 47 22 4 % 7 % 18 % 48 % 23 % (1) Grant management