EN Official Journal of the European Union C 303/225

STATEMENT OF ASSURANCE BY THE COURT OF AUDITORS ON THE SIXTH, SEVENTH, EIGHTH AND NINTH EUROPEAN DEVELOPMENT FUNDS (EDFs) FOR THE FINANCIAL YEAR 2004

(2005/C 303/02)

I — The European Court of Auditors (the Court) has examined the accounts of the sixth, seventh, eighth and ninth EDFs and the underlying transactions for the financial year ending 31 December 2004. These accounts comprise the financial statements, the reports on financial implementation, and the financial statements and information supplied by the European Investment Bank (EIB) (1). Pursuant to the financial regulations the Court is required to provide the European Parliament and the Council with a Statement of Assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions in respect of the part of the EDF resources for whose financial management the Commission is responsible (2). The Court carried out the audit in accordance with its auditing policies and standards. These are based on generally accepted international audit standards that have been adapted to the context of the EDFs. The Court thus obtained a reasonable basis for the opinions expressed below.

II — Reliability of the accounts

Except for the effects of the problems concerning:

(a) the incompleteness of the assets, as the Commission has not sufficiently investigated which part of the outstanding advances are to be reimbursed by the debtors to the EDF (see paragraph 14);

(b) the incompleteness of the provisions on doubtful debts, which do not reflect the real level of bad debts (see paragraph 15);

(c) the unreliability of the balance of Stabex funds disclosed in a report joined to the financial statements (832 million euro) (see paragraph 16);

the Court is of the opinion that the reports on financial implementation for the financial year 2004 and the financial statements at 31 December 2004 reliably reflect the revenue and expenditure relating to the sixth, seventh, eighth and ninth EDFs for the financial year and their financial situation at the end of the year.

III — Legality and regularity of the underlying transactions

Analysis of the supervisory systems and controls

The Court examined the implementation of the Commission’s internal control standards and tested the effectiveness of the supervisory and control systems. While progress has been achieved, further improvements need to be made in the following areas:

(a) risk management (see paragraphs 20 to 22);

(b) control framework (see paragraphs 23 to 33);

(c) accountability for internal control of Delegations (see paragraphs 34 and 35);

(d) Activity Report of the Director General of EuropeAid (see paragraph 36).

Audit of transactions

The Court examined a number of transactions on the basis of documentation available at the Commission central services and Delegations and also on-the-spot checks down to the level of implementing entities in the beneficiary ACP states. The examination aimed to verify compliance with the regulations and to ascertain the reality of works, supplies and services. As regards budget support expenditure, the examination stopped at the stage where the aid was paid to the beneficiary countries’ budgets. The Court found that the frequency and financial impact of the errors detected are not material (see paragraphs 37 to 41).

Conclusion on the legality and regularity of the underlying transactions

The Court is of the opinion that the revenue, the EDF allocations, the commitments and the payments of the financial year are, taken as a whole, legal and regular.

28 September 2005 Hubert WEBER President

(1) Pursuant to the provisions of Articles 96(1), 100, 101 and 125(2) of the Financial Regulation applicable to the ninth EDF; in practice, this refers, firstly, to the balance sheets and associated statements prepared by the accounting officer and, secondly, to the management accounts comprising the tables prepared by the principal authorising officer in consultation with the accountant. These financial statements are presented for each of the four EDFs and in a comprehensive, consolidated form. The financial statements and information supplied by the EIB are not covered by this Statement (see footnote 13).

(2) Pursuant to Article 103(3) of the above-mentioned Financial Regulation; taken together with Article 1 of the same Regulation, this means that the Statement does not extend to the part of the ninth EDF resources that is managed by the EIB and for which it is responsible.