VII. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the European Union’s consolidated accounts of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. We assessed the accounting treatment of the European Fund for Strategic Investments (EFSI) guarantee for the equity portfolios VIII. The European Fund for Strategic Investments (EFSI) is a joint initiative launched in 2015 ( 5 ) by the EU and the EIB Group, to encourage investment across the EU by increasing the risk-bearing capacity of the EIB Group. Under this initiative, the EU budget will provide a guarantee of up to 16 ( 6 ) billion euros to cover potential losses on EFSI operations for ‘Infrastructure and Innovation Window (IIW)’ and ‘Small and Medium-sized Enterprises Window (SMEW)’ investments ( 7 ) IX. We focused on this area in previous years because the set-up of the EFSI had given rise to a number of complex accounting issues resulting from the arrangements between the EU and the EIB. In November 2017, the Commission’s Accounting Officer consulted the Advisory Group of experts in relation to the appropriate accounting treatment of the SMEW equity operations guaranteed by the EU. In line with the advice received, and applying professional judgement, the Commission’s Accounting Officer decided that the Commission does not have control over the EFSI or share such control with the EIB ( 8 ) . This implies for the 2017 EU consolidated annual accounts that the EU guarantee granted to the EIB Group is treated: (a) as a financial guarantee liability for the IIW debt portfolio; (b) as a financial provision for the SMEW debt portfolio; and (c) as a derivative (financial asset or liability at fair value through surplus or deficit) for both equity portfolios. X. We have assessed the accounting treatment of the EFSI guarantee for the equity portfolios. We consider that it does not affect the true and fair view given in the 2017 EU consolidated annual accounts. We assessed the liability for pension and other employee benefits XI. The EU balance sheet includes a liability for pension and other employee benefits amounting to 73,1 billion euros at the end of 2017. This is one of the most significant liabilities in the balance sheet, accounting for almost a third of the total 2017 liabilities of 236,5 billion euros. XII. Most of this liability for pension and other employee benefits (64,0 billion euros) relates to the Pension Scheme of Officials and Other Servants of the European Union (PSEO). This pension liability covers the ‘defined benefit’ guaranteed by Article 83 of the Staff Regulations of Officials of the European Communities (the ‘Staff Regulations’) and Article 4(3) of the Treaty on the European Union (the ‘TEU’). The liability recorded in the accounts reflects the amount, which would have been included in a pension fund, had one been set up to pay existing retirement pension obligations ( 9 ) . In addition to retirement pensions, it covers invalidity pensions and pensions paid to widows/orphans of EU staff. Under Article 83 of the Staff Regulations, the benefits paid under the pension scheme are charged to the EU budget. Member States jointly guarantee the payment of the benefits and officials contribute one third of the cost of financing the scheme. XIII. The PSEO is a mandatory occupational pension scheme for EU civil servants, under which contributions from staff and from the institutions and bodies that employ them are used to finance future pensions. It is designed, through adjustments to the rate of contribution to the scheme and to pensionable age, to be in actuarial balance by default. The number and variety of parameters used to calculate a long-term projection of pension costs underlines the actuarial nature of this calculation, which is performed by Eurostat on an annual basis. XIV. As part of our audit, we evaluated the actuarial assumptions and the resulting valuation for the pension liability. We checked the numerical data, the actuarial parameters and the calculation of the liability, as well as the presentation made in the consolidated balance sheet and the notes to the consolidated financial statements. As stated in note 2.9 to the consolidated financial statements, the Commission is continuing to work towards strengthening its processes for calculating the employee benefits liability, which we will keep under review. We assessed the accrued charges presented in the accounts XV. At year-end 2017, the estimated value of incurred eligible expenses due to beneficiaries but not yet reported was 101 billion euros (year-end 2016: 102 billion euros). These amounts were recorded as accrued expenses ( 10 ) XVI. We examined the methodologies and control systems applied for year-end estimates in the main Directorates-General. We took samples of invoices and pre-financing payments and carried out work on these elements to address the risk of the accrual having been misstated. We sought additional clarification from the Commission’s accounting services on the general methodology. XVII. We can conclude that the estimate of the overall amount of accrued charges stated in the consolidated balance sheet is fair. We assessed the potential impact on the 2017 accounts of the United Kingdom’s withdrawal from the European Union XVIII. On 29 March 2017, the United Kingdom (UK) formally notified the European Council of its intention to leave the European Union (EU). On 22 May 2017, the negotiations started for the withdrawal agreement between the EU and the UK. XIX. Part Five (Financial Provisions) of the draft withdrawal agreement of 19 March 2018 concerning the financial settlement states that the UK will pay all its obligations under the current and previous Multiannual Financial Frameworks as if it were still a Member State. XX. Based on this, we conclude that the accounts as at 31 December 2017 correctly reflect the withdrawal process.