FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008

CONTENTS

Report of the Independent Auditor

Balance sheet

Economic outturn account

Cash flow statement

Statement of changes in equity

Accounting policies and notes to the financial statements

Independent Assurance report

In our opinion, these financial statements give a true and fair view of the financial position of the European Court of Auditors as of 31 December 2008 and of its financial performance and its cash flows for the year then ended in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 and Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation and the European Court of Auditors’ Accounting Rules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management of the European Court of Auditors, as well as evaluating the overall presentation of the financial statements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 the entity’s internal control.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the ‘Institut des Réviseurs d'Entreprises’. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

The management of the European Court of Auditors are responsible for the preparation and fair presentation of these financial statements in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation, and the European Court of Auditors’ Accounting Rules. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

We have audited the accompanying financial statements of the European Court of Auditors, which comprise the balance sheet as at 31 December 2008, the economic outturn account, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes.

The accompanying notes form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2008

The accompanying notes form an integral part of these financial statements.

Cash and cash equivalents at the end of the period

Cash and cash equivalents at the beginning of the period

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

1. General

The European Court of Auditors (hereafter the Court) was established by the Treaty of Brussels of 22 July 1975 and started operating as an external Community audit body in October 1977, with its headquarters in Luxembourg.

Mission of the European Court of Auditors

The Court is the EU Institution established by the Treaty to carry out the audit of EU finances. As the EU’s external auditor it contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the European Union.

The Court renders audit services through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. The Court communicates the results of its audits in clear, relevant and objective reports. It also provides its opinion on financial management issues.

The Court promotes accountability and transparency and assists the European Parliament and Council in overseeing the implementation of the EU budget, particularly during the discharge procedure. The Court is committed to being an efficient organisation at the forefront of developments in public audit and administration.

The financial year of the Court runs from 1 January to 31 December.

2. Significant accounting policies and presentation of the financial statements

2.1. Basis of presentation

The accounts of the Court are drawn up in accordance with the provisions of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities and with the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said financial Council Regulation.

The financial statements are prepared in accordance with the Accounting Rules of the European Communities, which have been inspired by International Public Sector Accounting Standard (IPSAS). These Accounting Rules are adopted by the Accounting Officer of the Commission after a consultation of the other institutions.

2.2. Valuation of foreign currency balances and transactions

Monetary items denominated in currencies other than EUR are translated into EUR at the exchange rate effective at the reporting date. Non-monetary items carried at a historical cost denominated in a currency other than EUR are reported using the exchange rate at the date of acquisition. Non-monetary items carried at a fair value denominated in a currency other than EUR are reported using the exchange rates that existed when the values were determined.

2.3. Intangible and tangible fixed assets

The intangible and tangible fixed assets are stated at historical cost less depreciation/amortisation and impairment. Low value items below EUR 420 are accounted as expenses during the year of acquisition. Assets delivered during the accounting year but not paid at year-end are reported as ‘under construction’. Depreciation/amortisation is calculated by the straight-line method, starting the month of acquisition and charged over their estimated useful lives, as follows:

Intangible (licences for computer software) 4 years Buildings 25 years Plant, machinery and tools 4, 8 years Furniture and vehicle fleet 4, 8, 10 years Computer hardware 4 years Fittings specific to leased buildings the duration of the lease Other fixtures and fittings 6 years

2.4. Employee benefits

Employee benefits represent the future pension rights of the Members of the Court. Under Article 19 of Council Regulation (EEC, Euratom, ECSC) No 2290/77 of 18 October 1977 determining the emoluments of the Members of the Court of Auditors (OJ L 268, 20.10.1977, p. 1), the benefits provided for in this pension scheme are entered in the budget of the Communities and the Member States jointly guarantee their payment.

The amounts guaranteed by the Member States are based, on the one hand, on the Accounting Rule No 12 ‘Employee benefits’ adopted by a decision of the Commission’s accounting officer pursuant to Article 133 of the Financial Regulation applicable to the general budget of the European Communities, and, on the other hand, on the basis of an actuarial analysis carried out by the experts of the specialised unit at Eurostat.

2.5. Provisions for liabilities and charges

Provisions for liabilities and charges are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.

3. Notes to the balance sheet

3.1. Intangible fixed assets

The movements in intangible fixed assets during the year 2008 were:

(EUR) Gross book value 1 January 2008 Additions Disposals Other changes Gross book value 31 December 2008 Accumulated depreciation 31 December 2008 Net book value 31 December 2008 Computer Software 290 514 339 366 — — 629 880 – 212 088 417 792 Total 290 514 339 366 0 0 629 880 – 212 088 417 792

3.2. Tangible fixed assets

The movements in tangible fixed assets during the year 2008 were:

(EUR) Gross book value 1 January 2008 Additions Disposals Transfer between headings Gross book value 31 December 2008 Accumulated depreciation 31 December 2008 Net book value 31 December 2008 Land 776 630 — — — 776 630 — 776 630 Buildings 52 074 987 — — — 52 074 987 –24 039 665 28 035 322 Plant, machinery and tools 1 256 222 3 815 –1 566 –1 126 868 131 603 – 101 469 30 134 Computer hardware 4 362 412 706 392 – 816 204 –65 458 4 187 142 –3 034 323 1 152 819 Furniture and vehicle fleet 1 715 569 274 711 – 237 754 290 074 2 042 600 –1 318 473 724 127 Other fixtures and fittings 1 043 800 37 171 –83 856 902 252 1 899 367 –1 615 568 283 799 Assets under construction 90 048 4 077 754 –90 048 — 4 077 754 — 4 077 754 Total 61 319 668 5 099 843 –1 229 428 0 65 190 083 –30 109 498 35 080 585

The ‘Transfer between headings’ are reclassifications of assets from one category to another on 1 January 2008.

‘Assets under construction’ are usually assets delivered but not yet invoiced at year end. When the invoice is received, the related assets will appear in the additions under the correct asset category and ‘disposals’ under ‘assets in construction’.

Assets under construction are also major building projects still in process at year-end which was the case as at 31 December 2008 for the new building K3 (studies), the health and safety works for building K1 and a new conference room.

3.3. Short-term receivables

Short-term receivable

(EUR) 31 December 2008 31 December 2007 Current receivables mainly due to the transfer of national pension rights by staff 504 166 628 778 Deferred charges for building rentals and IT contracts 614 114 560 782 Sundry receivables mainly related to payroll and mission advances 335 446 485 079 Receivable from EC entities (Publications Office) 2 055 5 133 Total 1 455 781 1 679 772

3.4. Cash and cash equivalents

Cash and cash equivalents

(EUR) 31 December 2008 31 December 2007 Imprest account 1 000 1 000 Current bank account 1 487 625 2 011 791 Total 1 488 625 2 012 791

3.5. Employee benefits

The calculation for future pension payments obligations is computed net of the taxes recovered on the future pension payments. The tax rate is updated based on the effective average tax rate during the last 3 years.

Pension liability and effect of the tax rate

(EUR) 31 December 2008 31 December 2007 Gross amount 63 730 921 50 871 762 Tax rate (%) 17,57 % 17,70 % Taxes 11 197 523 9 004 302 Amount net of taxes 52 533 398 41 867 460 Variation in 2008 of net pension liability 10 665 938

The employee benefits liability is calculated based on entitlements earned by Members pursuant to different rights acquired, such as life pensions and transitional allowances, as well as on beneficiary status categories assigned.

For the year 2008 Eurostat was for the first time responsible for the calculation of the liability. The actuarial commitment was calculated in conformity with EC accounting rule 12 ‘Employee benefits’.

The 2008 increase of EUR 10,7 million net of taxes arises primarily from the:

— inclusion for the first time in 2008 of the earned transitional allowance benefits of active Members of the Court in the calculation of the liability, reflecting a change in accounting method to comply with accounting rule 12, which amounted to EUR 4,7 million,

— the normal evolution of the employee benefits liability, due to, for example, changes in the interest rate and life tables, and the addition of new beneficiaries and benefits, which amounted to EUR 4,5 million, and

— changes and corrections to the staff database (marital status etc.).

The disclosure departs from the presentation laid out in the EC accounting rule 12 ‘Employee benefits’ due to the fact that the necessary detailed actuarial calculations were not provided by Eurostat.

3.6. Long-term liabilities

The amount of EUR 175 000 is contractually due at the termination of the rental of the building K9.

3.7. Provision for risks and charges

The amount corresponding to the value, net of taxes, of untaken holidays owed to staff was considered in the past as ‘Provision for risks and charges’. From 2008, untaken annual leave are considered as ‘accrued charges’ (and not provisions). In the balance sheet as at 31 December 2007, the amount of EUR 1 927 531 was shown under ‘Provisions for risks and charges’. It is now reclassified as ‘Accrued charges’ and shown in ‘Accounts payable’:

Provisions for risks and charges as of 31 December 2007

(EUR) 31 December 2007 Provision for risks and charges in balance sheet 31.12.2007 1 927 531 Reclassification provisions for risks and charges –1 927 531 Provision for risks and charges in balance sheet 31.12.2007 after reclassification 0





Accounts payable as of 31 December 2007

(EUR) 31 December 2007 Accounts payable in balance sheet 31.12.2007 6 314 949 Reclassification provisions for risks and charges 1 927 531 Accounts payable in balance sheet 31.12.2007 after reclassification 8 242 480

3.8. Accounts payable

Account payable

(EUR) 31 December 2008 31 December 2007 Accrued charges consist of expenses incurred but not yet invoiced. The amount of the untaken holidays is also included here for both 2007 and 2008 (see Note 3.7 above) 6 672 098 7 177 873 Sundry payables related to staff 427 175 522 592 Current payables to suppliers 540 605 484 724 Accounts payable against consolidated EC entities mainly to the European Council and Parliament 107 124 57 291 Total 7 747 002 8 242 480

4. Notes to the economic outturn account

4.1. ‘Funds transferred from the Commission to other institutions’: the amount corresponds to the monthly calls for funds made by the Court to the Commission to replenish its bank account.

4.2. ‘Revenues from administrative operations’: for the most part, this heading is made up of deductions from the salaries of Members and staff in respect of tax and social contributions.

4.3. ‘Other operating revenue’ arises among others from the sales of publications by the Publications Office.

4.4. ‘Staff expenses’: the salaries of Members and staff of the Court represent 96 % of this amount. The rest includes the salaries of the contractual agents and temporary staff.

4.5. The ‘fixed assets related expenses’ consist of the depreciation/amortisation of the tangible and intangible assets.

4.6. The most significant items of the ‘other administrative expenses’:

— buildings’ rental and associated charges,

— IT and telecommunications,

— missions expenses,

— cleaning and security services.

4.7. ‘Financial revenues’ consists of bank interest earned on the Court’s current account.

4.8. ‘Financial expenses’ are bank charges levied on the Court’s current account.

4.9. ‘Movements in pension’ includes:

Movements in pension

(EUR) 2008 Pension payments of the year –2 097 537 Variation of members' net pension liability –10 665 938 Total –12 763 475

5. Off balance sheet

5.1. Contingent assets

The following bank guarantees have been given by suppliers following contractual obligations:

Bank guarantee received

(EUR) 2008 Travel agency 50 000 Car pool leasing 75 000 Insurance company 1 361 Telecommunications 20 000 Total 146 361

5.2. Commitments for future funding

Commitments for future fundings

(EUR) 31 December 2008 K7 building 2 455 000 K8 building 2 229 333 K9 building 7 384 000 Brussels 'Antenne' 54 000 Foyer européen — Maison de l'Europe 50 565 Subtotal 12 172 898 Operating lease for cars and copy machines 640 251 Other (Cetrel, …) 89 698 Subtotal 12 902 847 Commitments against appropriations not yet consumed — RAL ('Restant à liquider') — after deduction of accruals for 2008 7 548 508 Total 20 451 355

5.3. The Court’s buildings projects

The Court occupied its headquarters building (the ‘K1’ building) in 1988 and purchased it and the land it stands on outright in 1990. In 1999, the Court signed a framework agreement with the Luxembourg State through which it was given the right to use a second parcel of land for 49 years (renewable once) for the construction of an extension (the ‘K2’ building) in return for a payment of one euro.

The Court has decided to go ahead with the construction of a second extension, the ‘K3’ building, and because of different arrangements for carrying out the project, the Luxembourg State and the Court concluded a new framework agreement on 22 February 2008.

As regards the two pieces of land relative to the two extensions mentioned above, the State has sold these to the Court for a symbolic one euro. For its part, should the Court ever consider ceding one or other of the buildings to a third party other than a Community body or institution, the Court will return the land to the ownership of the State in return for a symbolic one euro, the latter disposing also of an option to buy the building at a price to be determined by an independent expert. In case the State decides not to exercise this option, it would provide a right to use the land to the purchasers of the building.

The ‘K2’ building was occupied in November 2003. Construction work for the ‘K3’ building is scheduled to commence towards the end of 2009.

5.4. Potential liability for litigations

None.