Financial statements at 31 December 2006

Balance sheet at 31 December 2006 and 31 December 2005

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

Economic outturn account for the year ended 31 December 2006 and 31 December 2005

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

Funds transferred from the Commission to other institutions

Cash flow statement for the financial year 2006

Cash and cash equivalents at the end of the financial year

Cash and cash equivalents at the beginning of the financial year

Statement of changes in equity for the year 2006

NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2006

1. Accounting principles

1.1. Regulations and presentation of the accounts

The accounts of the European Court of Auditors (the Court) are kept and the financial statements 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 Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said financial Regulation.

1.2. Intangible and tangible fixed assets

The intangible and tangible fixed assets are stated at historical cost less depreciation and impairment.

Depreciation is calculated by the straight-line method and charged over their estimated useful lives, as follows:

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

1.3. Pre-financing

Pre-financing is a payment intended to provide the beneficiary with funds in advance, e.g. a petty cash account. It may be split into a number of payments over a period defined in the particular pre-financing agreement. The advance is repaid or used for the purpose for which it was provided during the period defined in the agreement.

At the year end, outstanding pre-financed amounts are valued at the original amounts paid out less the sum of any amounts returned, cleared eligible expenditure, estimated eligible expenditure not yet cleared at the year-end, and any reductions in value.

1.4. Receivables

Receivables are carried at their original value less amortisation for impairment where applicable.

1.5. Payables

Payables are entered in the balance sheet at their nominal value.

1.6. Commitments for the Members' pension scheme

Under Article 19 of Council Regulation (EC, 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 payment of them.

The amounts guaranteed by the Member States are based, on the one hand, on accounting standard 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 PMO unit at the Commission.

Since the 2006 financial year, the pension provision has been calculated net of taxes withheld at the time that pension payments are made on the grounds that these taxes constitute revenue for the Court of Auditor's budget (see comments in paragraph 4). In 2005, the pension provision included these taxes. If the Court had applied these principles in 2005, the amount of the provision at 31 December 2005 would have been EUR 41 779 878. The comparative figures have not been adjusted.

2. Intangible and tangible fixed assets

(in 1000 euro) 2006 2005 Depreciable value Cumulative depreciation Net book value Net book value Intangible fixed assets 1 945 (1 353) 592 537 Tangible fixed assets — land 777 — 777 777 — buildings 52 075 (19 735) 32 340 34 198 — plant, machinery and tools 1 199 (856) 343 358 — furniture and vehicle fleet 1 845 (1 260) 585 630 — computer hardware 3 867 (2 926) 941 1 398 — other tangible fixed assets 1 044 (609) 435 609 — tangible assets in the course of construction 199 — 199 25 Sub-total 61 006 (25 386) 35 620 37 995 Total 62 951 (26 739) 36 212 38 532

3. Short-term receivables

Short-term receivables mostly correspond to entitlements established but not yet collected, of which EUR 841 528 (2005: EUR 1 392 326) are attributable to the acquisition of national pension rights by members of the Court's staff.

The balance mainly consists of advances paid for mission expenses already incurred by the Members and staff of the Court but not yet settled and accrued expenses calculated in advance.

4. Employee benefits

Employee benefits represent the future pension rights of the Members of the Court.

The Employee benefits amount for 2006 is stated net of tax (see comments in paragraph 1.6).

5. Current payables

‘Current payables’ comprise amounts due to suppliers, mission expenses still to be invoiced by the credit card organisation and amounts due to sundry beneficiaries.

In addition, this item includes amounts due to staff for acquired rights under the Staff Regulations and for mission expenses yet to be reimbursed.

6. Net assets

The movements in net assets in 2006 were as follows:

(1000 euro) Balance at 31 December 2005 (11 450) Economic outturn for the financial year 32 Net assets at 31 December 2006 (11 418)

7. Revenue from administrative operations

This item principally comprises taxes and social security contributions on the salaries of the Members and staff.

8. Other administrative expenses

The main items under this heading are rents of buildings and related charges, mission expenses of the staff and Members, IT expenses, and expenses relating to professional training.

9. Off-balance sheet commitments

Under the framework agreement concerning the construction of one or more extensions to the Court building, which was concluded by the Court of Auditors on 15 December 1999, the contracting parties agreed as follows:

The Luxembourg State undertakes to grant the Court a building lease on the land for the first extension at the price of EUR 1 (one) for a period not exceeding 49 years. Any further building leases on other land needed for the other extensions must not exceed the expiry date of the building lease granted for the first extension.

The Court decided to proceed with a second extension (K3 building) and, because the conditions of performance are different, the Luxembourg State and the Court have agreed to conclude a new framework agreement, due to be signed in 2007.

Moreover, the following bank guarantees were arranged by third party suppliers for proper performance of contracts:

(1000 euro) 2006 2005 — for the provision of travel agency services 51 20 — for the long-term hire of official vehicles 75 75 — for the provision of catering services 28 28 Total 154 123

For four existing rental contracts, the outstanding rent commitments amount to EUR 7 960 550, (2005: EUR 9 951 290), itemised below:

(1000 euro) 2006 2005 — buildings 7 833 9 758 — Brussels office 110 144 — parking facilities 17 50 Total 7 960 9 952