EN Official Journal of the European Union C 409/1

Summary of results from the Court’s 2014 annual audits of the European Agencies and other bodies

(2015/C 409/01)

CONTENTS

Paragraph Page INTRODUCTION 1 2 INFORMATION IN SUPPORT OF THE COURT’S OPINIONS 13 3 AUDIT RESULTS 3 Opinions on the reliability of the accounts 17 3 Opinions on the legality and regularity of the transactions underlying the accounts 19 4 Comments not calling the Court’s opinions into question 21 4 Comments on the reliability of accounts 23 4 Comments on the legality and regularity of transactions 24 5 Comments on internal controls 25 5 Comments on budget implementation 26 5 Other comments 29 5 Follow-up of previous years’ comments 32 5 CONCLUSIONS 33 6 ANNEX I — Agencies’ Income (Budget forecasts, entitlements established and amounts received) and Staff establishments plans 7 ANNEX II — Comments made by the Court in 2014, not calling its opinion into question 12 ANNEX III — Follow-up of open 2012 and 2013 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 issued an opinion on the reliability of the accounts and on the legality and regularity of the underlying transactions, for the financial year ended 31 December 2014, for each of the 32 regulatory agencies, six executive agencies, the Euratom Supply Agency (Euratom), the European Institute of Innovation and Technology (EIT) and the Europol Pension Fund (see Table).

2. As in prior years the Court has audited the legality and regularity of the transactions. However, 2014 is the first year whereby the annual accounts of the 30 Union-subsidised regulatory agencies and EIT were verified by an independent external auditor (audit firm) according to Article 208(4) (1) of the new EU Financial Regulation and Article 107(1) (2) of the new framework financial Regulation for agencies. The Court’s opinion on these accounts considered the audit work performed by the independent external auditor and the action taken in response to the auditor’s findings.

3. For the Euratom Supply Agency, two fully self-financed agencies (OHIM and CPVO), the six executive agencies and the Europol Pension Fund (EPF), the Court carried out its own audit work on the annual accounts. Table Audit arrangements by cluster Agencies audited by the Court Audited by ECA only Audited by ECA + external auditor Total Regulatory Agencies Union-subsidised agencies — 30 32 Self-financed agencies — OHIM and CPVO 2 — Executive agencies EACEA, REA, ERCEA, EASME, INEA and CHAFEA 6 — 6 Other bodies Euratom and EPF 2 — 3 EIT — 1 Total 10 31 41

4. Details on the audited agencies, their budgets and staff are provided in Annex I.

5. This summary provides an overview of the results of the Court’s annual audits of the agencies for the financial year 2014. It aims to facilitate the analysis and comparison of the Court’s specific reports. The Court’s opinions and comments as well as the agencies’ replies can be found in the Specific Annual Reports (SAR). This summary is not an audit report or opinion.

6. 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 policy-making 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.

7. The six executive agencies are entrusted with tasks relating to the management of one or more Union programmes and are set up for fixed periods of times. They are located in Brussels (five) or Luxembourg (one).

8. EIT in Budapest is an independent, decentralised EU body which pools scientific, business and education resources to boost the Union’s innovation capacity.

9. Euratom in Luxembourg was created to support the aims of the European Atomic Energy Community Treaty.

10. The Europol Pension Fund, which is located in The Hague, was established to finance and pay pensions for staff employed by Europol before it became a European Agency on 1 January 2010.

11. The agencies’ total 2014 budget amounted to some 1,9 billion euro (2013: 2 billion euro) or about 1,4 % of the 2014 EU general budget (2013: 1,4 %). Approximately 1,2 billion euro comes from the European Commission’s subsidies and the rest is income from fees and other sources. The agencies employ 6 578 (2013: 6 536) permanent and temporary officials or 14 % (2013: 14 %) of total EU officials authorised under the EU general budget (staff establishment plan). In addition, some 3 200 (2013: 2 900) other staff are working for the agencies (contractual or seconded staff). The increase in staff is primarily concentrated in those agencies assigned additional tasks, those with supervisory responsibility for the financial industry, and the executive agencies with additional responsibilities under Horizon 2020 and other programmes.

12. Whereas financial risk related to the agencies is relatively low compared to the total EU budget, the reputational risk for the Union is high. Nevertheless, the agencies 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

13. Regarding the 31 agencies audited by an independent external auditor, the Court has reviewed the work of the audit firms in accordance with international audit standards. In forming its opinion on the reliability of the accounts expressed in the SARs, the Court took into account the audit firms’ work.

14. There is adequate assurance for the Court to base its own audit opinions on the reliability of the accounts using the private audit firms’ work.

15. Regarding the legality and regularity of transactions, for which the Court remains exclusively responsible, the audit approach comprises analytical audit procedures, direct testing of transactions and an assessment of the agencies’ internal controls.

16. For the remaining 10 agencies, the Court continued to perform the audit of both the legality and regularity of the underlying transactions and the reliability of the accounts.

AUDIT RESULTS

Opinions on the reliability of the accounts

17. The final accounts of the 41 agencies present fairly, in all material respects, their financial position as at 31 December 2014 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.

18. The Court included emphasis of matter (3) paragraphs in relation to the reliability of the accounts of European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) and the EPF. In the case of eu-LISA, the situation to which the Court drew attention in its 2013 SAR continues, namely the need for reliable and complete data for the valuation of the agency’s core information systems, including the costs of hardware, off-the-shelf software and software development. These assets are being depreciated and while still material for 2014, the amount involved is decreasing each year. In the case of the EPF, the Court drew attention to the fact that the EPF’s 2014 accounts were prepared on a going concern basis whereas it is expected that by the end of 2015 there will be no active participants and the liquidation of the Fund is currently being assessed.

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

19. The Court concluded that for the 41 agencies, the transactions underlying the annual accounts for the year ended 31 December 2014 were legal and regular in all material respects.

20. The Court included an emphasis of matter paragraph in relation to the legality and regularity of the transactions underlying the accounts of EIT. The grant agreements signed under the Framework Partnership Agreements (FPA) with the three first ‘Knowledge and Innovation Communities’ (KICs) stipulate that the EIT financial contribution may not exceed 25 % of the KIC’s global expenditure over the first five years, from 1 January 2010 to 31 December 2014.

Comments not calling the Court’s opinions into question

21. Without calling its opinions into question, the Court made a total of 79 comments (2013: 97) affecting 35 agencies (2013: 35) 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. Chart Number of comments by heading Source: Specific reports on the agencies 2014 annual accounts.

22. An overview of the comments made for each of the agencies is provided in Annex II. A summary of the most frequent comments and/or those comments of particular relevance is provided below.

Comment on the reliability of accounts

23. In addition to the two emphasis of matter paragraphs previously noted, there was one comment on the reliability of the accounts affecting European Securities and Markets Authority (ESMA) that addresses the disclosure of revenue based on estimated amounts rather than actual amounts.

Comments on the legality and regularity of transactions

24. The five comments (2013: seven) in this category affect five agencies (2013: seven) and relate to weaknesses in procurement procedures regarding the clarity of the tender technical specifications and the timeliness of the calls for tender; weaknesses in grant controls and compliance with regulatory dates for the collection of fees.

Comments on internal controls

25. The seven comments (2013: 17) affect seven agencies (2013: 10). In two cases they relate to weaknesses in grant controls (2013: two) and in another case to weaknesses in controls over assets (2013: two); the other comments refer to different internal control shortcomings. Overall, there has been a significant improvement in internal control. Comments decreased by more than 50 % and there are no comments related to non-implementation of internal control standards (ICS).

Comments on budget implementation

26. A high level of carry-overs of committed appropriations remains the most frequent comment in this area and affected 28 agencies (2013: 24). Although it 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.

27. High rates of cancellation of carry-overs from previous years were noted in eight cases (2013: seven). Such cancellations indicate that the appropriations carried over were made on the basis of over-estimated needs or were otherwise not justified.

28. There are three comments on insufficient commitments (2013: six) and one comment on high budget transfers (2013: three).

Other comments

29. There was a total of 22 other comments (2013: 22) made in respect of 17 agencies (2013: 15), of which seven relate to matters of sound financial management. Four of the seven observations related to weaknesses in procurement and contract management: the accumulation of significant overheads and profits; insufficient competition on price due to excessive concentration on quality; planned objective and activities not sufficiently specific to justify the procurement decision; and poor planning to replace an existing contract which affected fair competition.

30. During the audit of one agency, a miscalculation in salaries, resulting in the underpayment of some EU staff recruited before the application of the 2004 Staff Regulations was detected by the Court. Following further checks requested by the Court the same problem was found in 18 other agencies (total underpayments some 3 78 670 euro). However the sums involved were only significant for six agencies and thus specifically mentioned in the relevant SAR. A difference of opinion exists between the agencies and the PMO as to where responsibility for the error lies.

31. The European Environment Agency (EEA) contracted backup services with a cloud services provider using an interinstitutional contract procured by DIGIT. The conditions of the contract did not ensure that the privileges and immunities of the European Communities, which are applicable to the Agency, were guaranteed, nor that the privacy guarantees granted by Article 7 of the Charter of Fundamental Rights to citizens of the European Union are respected. It is likely that other agencies will use such services in future. It is important that they ensure that such services provide full protection of the privileges and immunities necessary for the performance of the Agency and privacy of EU citizens.

Follow-up of previous years’ comments

32. The 2014 specific annual reports provide an overview of follow-up actions taken by the agencies in response to open comments from previous years. Annex III shows that for the 153 comments open at the end of 2013, corrective action was completed during 2014 in 51 cases; remained ongoing in 41 cases; and six comments remained outstanding. No corrective action was required for 55 comments, mainly in relation to justified budget carry-overs.

CONCLUSIONS

33. All agencies have produced reliable accounts. The Court expressed two emphases of matter for eu-LISA and EPF.

34. The Court concluded that transactions underlying the accounts were legal and regular for all agencies and expressed one emphasis of matter for EIT.

35. There was one comment in respect of the EEA’s use of cloud services.

36. There were six observations related to underpayments of EU staff recruited before the application of the 2004 Staff Regulations.

37. Agencies further improved their procedures by taking corrective action in response to the Court’s comments from previous years. Nevertheless, there is still room for improvement, as indicated by the number of comments made in 2014.

(1) Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

(2) Article 107 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

(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.

ANNEX I Agencies' Income (Budget forecasts, entitlements established and amounts received) and Staff establishments plans 2014 2013 Agency Parent DG Policy Area Forecasted Income budget (1) Entitlements established (1) Amounts received (1) Staff establishment plan (2) Forecasted Income budget (1) Entitlements established (1) Amounts received (1) Staff establishment plan (2) (million euro) (million euro) (million euro) (million euro) (million euro) (million euro) Regulatory Agencies European Medicines Agency — EMA SANCO Health and Consumer Protection 282 311 272 599 252 269 240 611 Office for Harmonisation in the Internal Market — OHIM MARKT Internal Market 194 196 196 844 418 189 189 861 European Aviation Safety Agency — EASA MOVE Mobility and Transport 162 145 137 685 151 125 125 692 European Agency for the Management of Operational Cooperation at the External Borders — FRONTEX HOME Home Affairs 98 87 87 152 94 92 92 153 European Police Office — EUROPOL HOME Home Affairs 84 85 85 450 83 83 83 457 European Food Safety Authority — EFSA SANCO Health and Consumer Protection 80 80 80 344 76 76 76 351 European Maritime Safety Agency — EMSA MOVE Mobility and Transport 58 58 58 210 57 58 56 213 European Centre for Disease Prevention and Control — ECDC SANCO Health and Consumer Protection 60 59 59 194 58 59 59 198 Translations Centre for the Bodies of the EU — CDT LANGUAGE Language Services 56 48 47 203 52 54 50 206 European Environment Agency — EEA ENV-CLIM Environment 43 53 52 135 49 63 63 138 European Body for the Enhancement of Judicial Cooperation — EUROJUST HOME Justice 34 34 34 209 32 32 32 213 European Chemicals Agency — ECHA ENTERPRISE AND INDUSTRY Enterprise 33 37 37 495 99 98 98 503 European Railway Agency — ERA MOVE Mobility and Transport 26 26 26 140 26 26 26 143 European Union Agency for Fundamental Rights — FRA JUSTICE Justice 21 21 21 75 22 22 22 78 European Banking Authority — EBA MARKT Internal Market 34 34 34 111 26 26 26 93 European foundation for improvement of living & working conditions — EUROFOUND EMPL Employment and Social Affairs 21 21 21 99 21 21 21 101 European Training Foundation — ETF EAC Education and Culture 20 21 21 94 20 22 22 96 European Securities and Markets Authority — ESMA MARKT Internal Market 33 32 32 133 28 30 30 121 European Centre for the Development of Vocational Training — CEDEFOP EAC Education and Culture 18 17 17 98 19 18 18 100 European Insurance and Occupational Pensions Authority — EIOPA MARKT Internal Market 22 22 22 87 19 18 18 80 European Monitoring Centre for Drugs and Drug Addiction — EMCDDA HOME Home Affairs 15 16 16 82 16 16 16 84 European Agency for Safety and Health at Work — EU-OSHA EMPL Employment and Social Affairs 15 15 15 43 15 16 16 44 Community Plant Variety Office — CPVO SANCO Agriculture and Rural Development 15 13 13 47 14 13 13 48 European GNSS Agency — GSA ENTERPRISE AND INDUSTRY Enterprise 25 358 358 96 14 54 54 77 European Fisheries Control Agency — EFCA MARE Maritime Affairs & Fisheries 9 9 9 53 9 9 9 54 European Institute for Gender equality — EIGE JUSTICE Justice 7 7 7 29 7 8 8 30 European Police College — CEPOL HOME Home Affairs 9 9 9 27 8 9 9 28 European Network and Information Security Agency — ENISA INFSO Information Society and Media 10 10 10 48 10 10 9 47 European Agency for the Cooperation of Energy Regulators — ACER ENER Energy 11 11 11 54 12 12 12 49 European Asylum Support Office — EASO HOME Home Affairs 16 13 13 51 11 10 10 45 Office of the body of European Regulators for Electronic Communications — BEREC INFSO Information Society and Media 4 4 4 16 4 4 4 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 65 57 57 120 34 19 19 120 Executive Agencies Education, Audiovisual and Culture Executive Agency — EACEA EAC Education and Culture 47 47 47 108 51 52 52 105 Research Executive Agency — REA RTD Research and Innovation 52 52 52 145 47 47 47 140 European Research Council Executive Agency — ERCEA RTD Research and Innovation 36 36 36 100 40 40 40 100 Executive Agency for Small and Medium-sized Enterprises — EASME (previously EACI) ENER Energy, Entrepreneurship and Innovation 24 25 25 77 16 16 16 37 Innovation and Networks Executive Agency — INEA (previously TEN-TEA) MOVE Mobility and Transport 13 14 14 49 10 10 10 33 Consumers, Health, Agriculture and Food Executive Agency — CHAFEA (previously EAHC) SANCO Consumer Protection 7 7 7 12 7 7 7 12 Other Bodies European Institute of Innovation and Technology — EIT EAC Innovation and Technology 175 167 167 39 99 97 97 34 Euratom Supply Agency (3) — EURATOM ENER & RTD Energy and Innovation 0,1 0,1 0,1 25 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 1 934 2 257 2 208 6 578 2 026 1 830 1 794 6 536 2014 2013 Commission subsidy part in agencies’ income: 60,5 % 51,9 % Agencies’ forecasted income budget in comparison with EU general budget: 1,4 % 1,4 % Agencies’ staff establishment plan in comparison with total under the EU general budget: 14,1 % 14,0 % (1) According to 2014/2013 consolidated EU annual accounts. (2) Permanent and temporary EU officials (AD, AST and AST/SC) only, according to staff establishment plan. (3) Euratom Supply Agency is not consolidated in the EU annual accounts;

ANNEX II Comments made by the Court in 2014, 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 Weaknesses in grant controls Carry overs without legal commitment Delays in collecting fees Weak controls over fixed assets/stock taking Weak grant controls Other High carry-overs High budget transfers High cancellations of 2013 carry-overs Insufficient commitments Other SFM Miscalculation in staff salaries High turnover of staff Other 1 ACER — Ljubljana 3 X X X 2 BEREC — Riga 3 X X X 3 CdT — Luxembourg 1 X 4 CEDEFOP — Thessaloniki 0 5 CEPOL — Budapest 2 X X 6 CHAFEA — Luxembourg 1 X 7 CPVO — Angers 2 X X 8 EACEA — Brussels 1 X 9 EASA — Koln 2 X X 10 EASME — Brussels 3 X X X 11 EASO — Valletta 7 X X X X X X X 12 EBA — London 1 X 13 ECDC — Stockholm 1 X 14 ECHA — Helsinki 2 X X 15 EEA — Kobenhavn 3 X X X 16 EFCA — Vigo 0 17 EFSA — Parma 1 X 18 EIGE — Vilnius 1 X 19 EIOPA — Frankfurt 1 X 20 EIT — Budapest 4 X X X X 21 EMA — London 4 X X X X 22 EMCDDA — Lisboa 1 X 23 EMSA — Lisboa 0 24 ENISA — Heraklion 1 X 25 EPF — The Hague 0 26 ERA — Valenciennes 2 X X 27 ERCEA — Brussels 1 X 28 ESMA — Paris 4 X X X X 29 ETF — Torino 3 X X X 30 eu-LISA — Tallinn 2 X X 31 EU-OSHA — Bilbao 2 X X 32 EURATOM — Luxembourg 0 33 EUROFOUND — Dublin 2 X X 34 EUROJUST — The Hague 2 X X 35 EUROPOL — The Hague 2 X X 36 FRA — Wien 2 X X 37 FRONTEX — Warsaw 4 X X XX 38 GSA — Prague 3 X XX 39 INEA — Brussels 1 X 40 OHIM — Alicante 4 X X X X 41 REA — Brussels 0 Subtotals: 79 1 2 1 1 1 2 2 3 28 1 8 3 4 7 6 2 7 Totals: 1 5 7 44 22 1 % 6 % 9 % 56 % 28 %