Statement of assurance

(2003/C 316/02)

I. Pursuant to the provisions of Article 248 of the Treaty, the Court has examined the consolidated annual accounts(1) of the European Communities for the financial year ended 31 December 2002. It carried out its audit in accordance with its own audit policies and standards, which are based on international standards that have been adapted to the Community context. Through its audit, the Court has obtained a reasonable basis for the opinion expressed below. In the case of own resources the scope of the Court's audit work was limited(2).

Reliability of the accounts

II. In the Court's opinion, the consolidated annual accounts of the European Communities and the notes to them were drawn up in accordance with the provisions of the Financial Regulation of 21 December 1977 and with the accounting principles, rules and methods set out in the annexes to the consolidated financial statements(3). Except for the effects of the observations in paragraphs (a) to (d) and the remark in paragraph III, they faithfully reflect the revenue and expenditure of the Communities for the year and their financial position at the year-end:

(a) in the absence of sufficient budgetary appropriations, 820 million euro of legal commitments are included amongst the off-balance sheet commitments;

(b) the called-up part (240 million euro) of the Commission's commitment (520 million euro) to the capital of the Galileo joint undertaking does not appear as such on the assets side of the balance sheet;

(c) the transitional accounts entered on the assets side of the balance sheet in the sum of 91,1 million euro and in the sum of 714,9 million euro on the liabilities side should be redistributed amongst the various other balance sheet or revenue and expenditure (operating) account headings according to the nature of their individual components;

(d) in the absence of effective internal control procedures for miscellaneous revenue and advances, the Court cannot be certain that the transactions relating to the sundry debtors item have been correctly and completely recorded.

III. As has been the case in the past, the origin of the Court's observations lies in the Community accounting system, which was not designed to ensure that the assets are fully recorded. In this context, the Court notes that on 17 December 2002 the Commission adopted an action plan for the modernisation of the European Communities' accounting system. The action plan is supposed to become fully effective as from the 2005 financial year.

Legality and regularity of the underlying transactions

IV. In view of the results of its audits, the Court is of the opinion that the transactions underlying the consolidated annual accounts of the European Communities, taken as a whole, are legal and regular in respect of the revenue, commitments, administrative expenditure and pre-accession aid, although in the latter case the supervisory systems and controls are particularly in need of strengthening.

V. As regards other payments, the Court established that:

(a) in the case of EAGGF Guarantee Section, the payments were, again, materially affected by errors. Arable crops are less exposed to the risk of error than animal premiums, whereas the other categories of expenditure, which are not subject to the integrated administration and control system (IACS), are exposed to greater risk, as well as being subject to less efficient controls;

(b) in the case of the structural measures, in spite of an improvement in the supervisory systems and controls, especially at Commission level, the same types of error occurred at Member State level with the same frequency as in previous years;

(c) in the case of internal policies, the transactions are still affected by significant errors in terms of legality and regularity. In the case of the research framework programmes, these errors are likely to persist if the rules governing the programmes are not revised;

(d) in the case of the external actions, the irregularities noted in the past are persisting at local level. As a result of a process of management decentralisation that is still ongoing, the supervisory systems and controls do not yet provide the Commission with assurance of the legality and regularity of the payments at the level of the bodies responsible for implementing development projects.

8 and 9 October 2003

Juan Manuel FABRA VALLÉS

President

European Court of Auditors

12, rue Alcide De Gasperi, L-1615 Luxembourg

(1) Namely "Revenue and expenditure account: execution of the budget" and "Consolidated balance sheet", which make up Volume I of the annual accounts of the European Communities, 2002 financial year.

(2) Firstly, the Court's audits focus on macroeconomic statistics for which the underlying data cannot be audited directly, and secondly, they cannot possibly cover the imports that have not been subject to customs supervision.

(3) See Annex 1, Volume 1, of the final accounts of the European Communities, financial year 2002.