FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009

CONTENTS

ANNUAL ACCOUNTS

Independent Auditor's report

Balance sheet as of 31 December 2009

Economic outturn account for the year ended 31 December 2009

Cash flow statement for the year ended 31 December 2009

Statement of changes in equity for the year ended 31 December 2009

Accounting policies and notes to the financial statements

Budget information financial year 2009

Independent assurance report

In our opinion, these financial statements give a true and fair view of the financial position of the European Court of Auditors as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation and the European Court of Auditors’ Accounting Rules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management of the European Court of Auditors, as well as evaluating the overall presentation of the financial statements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the ‘Commission de surveillance du secteur financier’. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

The Management of the European Court of Auditors are responsible for the preparation and fair presentation of these financial statements in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation, and the European Court of Auditors’ Accounting Rules. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

We have audited the accompanying financial statements of the European Court of Auditors, which comprise the balance sheet as at 31 December 2009, the economic outturn account, the statement of changes in equity and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes, and which starts on page 4 and ends on page 14.

To the Management of the European Court of Auditors

The accompanying notes on pages 8 to 15 form an integral part of these financial statements.

as explained in the Note 4.9 to the Economic outturn account, a net amount of 712 650 EUR is reclassified for 2008 from ‘Staff Expenses’ to ‘Movement in Pension’ to ensure proper comparative information between the year ended 31 December 2008 and the year ended 31 December 2009. This reclassification does not impact the final economic result of the year nor the balance-sheet.

The accompanying notes on pages 8 to 15 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2009

The accompanying notes on pages 8 to 15 form an integral part of these financial statements.

Cash and cash equivalents at the end of the period

Cash and cash equivalents at the beginning of the period

The accompanying notes on pages 8 to 15 form an integral part of these financial statements.

The accompanying notes on pages 8 to 15 form an integral part of these financial statements.

Accounting policies and notes to the financial statements

1. General

The European Court of Auditors (hereafter the ‘Court’) was established by the Treaty of Brussels of 22 July 1975 and started operating as an external Union audit body in October 1977, with its headquarters in Luxembourg.

Mission of the European Court of Auditors

The Court is the EU Institution established by the Treaty to carry out the audit of EU finances. As the EU external auditor it contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the European Union.

The Court renders audit services through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. The Court communicates the results of its audits in clear, relevant and objective reports. It also provides its opinion on financial management issues.

The Court promotes accountability and transparency and assists the European Parliament and Council in overseeing the implementation of the EU budget, particularly during the discharge procedure. The Court is committed to being an efficient organisation at the forefront of developments in public audit and administration.

The financial year of the Court runs from 1 January to 31 December.

2. Significant accounting policies and presentation of the financial statements

2.1. Basis of presentation

The accounts of the Court 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 with the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said financial Council Regulation.

The financial statements are prepared in accordance with the Accounting Rules of the European Union (EC Accounting Rules), which have been inspired by International Public Sector Accounting Standard (IPSAS). These Accounting Rules are adopted by the Accounting Officer of the Commission after a consultation of the other institutions.

2.2. Valuation of foreign currency balances and transactions

Foreign currency transactions are translated into EUR using the exchange rate prevailing at the date of the transaction.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the economic outturn account.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December.

2.3. Intangible and tangible fixed assets

The intangible and tangible fixed assets are stated at historical cost less amortisation/depreciation and impairment. Low value items below EUR 420 are accounted as expenses during the year of acquisition. Assets delivered during the accounting year but not paid at year-end are reported as ‘under construction’; assets under construction also include major building projects still in process at year-end.

Depreciation/amortisation is calculated by the straight-line method, starting the month of acquisition and charged over their estimated useful lives, as follows:

Intangible (Licences for computer software) 4 years Buildings 25 years or expected useful life 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 Other fixtures and fittings 4, 6, 8 years

2.4. Employee benefits

Employee benefits represent the future pension rights of the Members of the Court in accordance with Article 19 of Council Regulation (EEC, Euratom, ECSC) No 2290/77 of 18 October 1977 determining the emoluments of the Members of the Court of Auditors (OJ L 268 of 20.10.1977, p. 1), the benefits provided for in this pension scheme are entered in the budget of the Union and the Member States jointly guarantee their payment.

The liability for these future pension payments is accounted and disclosed in accordance with EC Accounting Rule 12 ‘Employee Benefits’. The methodology to calculate the liability takes account of characteristics of the pension scheme as defined in accounting rule IPSAS 25.

IPSAS 25 requires that the cost of post-employment benefits be assessed in the present (i.e. when the Member acquires his pension rights). The actuarial commitment is determined on an ongoing basis, taking into account both the promised benefits during the active lifetime and foreseeable increase in salaries. The actuarial valuation method used to calculate the liability is ‘the projected unit credit method’.

The liability is reduced by the estimated amount of taxes that will be applied to future pension payments since these taxes revert to the EU budget as revenue.

The pension liability is recomputed every year at reporting date. In the economic outturn account, the pension expense for the year consists of the pensions paid during the year and of the adjustment of the pension liability at year-end, both net of taxes. Actuarial gains and losses are recognised in the economic outturn account.

Regarding potential ‘Plan assets’, the European Union does not currently have any assets devoted to financing pension commitments.

2.5. Provisions for risks and charges

Provisions for risks and charges are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.

2.6. Recognition of expenses

Transactions and events are recognised in the financial statements in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on the amount of the goods delivered or services rendered.

Conversely, some payments made in current year relate to subsequent periods and are identified as deferred charges to be included in the subsequent period(s).

The calculation of accrued and deferred expenses at year end is referred to as the cut-off exercise for which a detailed methodology and practical guidelines have been put in place.

3. Notes to the balance sheet

3.1. Intangible fixed assets

The movements in intangible fixed assets during the year 2009 were:

(EUR) Gross book value 1 January 2009 Additions Disposals Gross book value 31 December 2009 Accumulated amortisation 31 December 2009 Net book value 31 December 2009 Computer Software 629 882 168 220 — 798 102 – 396 886 401 216 Total 629 882 168 220 — 798 102 – 396 886 401 216

3.2. Tangible fixed assets

The movements in tangible fixed assets during the year 2009 were:

(EUR) Gross book value 1 January 2009 Additions Disposals and reclassifications Gross book value 31 December 2009 Accumulated depreciation 31 December 2009 Net book value 31 December 2009 Land 776 630 — — 776 630 — 776 630 Buildings 52 074 987 7 515 1 392 129 53 474 631 –26 319 838 27 154 793 Plant and equipments 131 603 68 128 –3 402 196 329 – 116 064 80 265 Computer hardware 4 187 142 507 846 — 4 694 988 –3 603 516 1 091 472 Furniture and vehicle 2 042 600 198 610 – 158 011 2 083 199 –1 306 282 776 917 Other fixtures and fittings 1 899 367 82 907 –1 758 1 980 516 –1 808 983 171 533 Assets under construction 4 077 754 3 817 107 –1 392 129 6 502 732 — 6 502 732 Total 65 190 083 4 682 113 – 163 171 69 709 025 –33 154 683 36 554 342

‘Assets under construction’ are assets partially delivered or delivered but not yet invoiced at year end; this includes major building projects still in process at year-end. When the delivery is accepted and the invoice is received, the related assets are reclassified to the correct heading.

Assets under construction amount to EUR 6 502 732 as at 31 December 2009, and correspond to studies for the building K3 (EUR 2 077 656) and to health and safety works for the building K1 (EUR 4 425 076).

This year, the amount of EUR 1 392 129 for the renovation and upgrade of the conference room in the building K1 was transferred to the heading ‘Buildings’.

3.3. Short-term receivables

(EUR) 31 December 2009 31 December 2008 Current receivables mainly due to the transfer of national pension rights by staff 398 142 504 166 Sundry receivables mainly related to payroll and mission advances 367 360 335 446 Deferred charges for building rentals and IT contracts 197 446 614 114 Receivable from EU entities (Publications Office) 2 260 2 055 Total 965 208 1 455 781

3.4. Cash and cash equivalents

(EUR) 31 December 2009 31 December 2008 Petty cash 1 000 1 000 Bank current account 1 526 466 1 487 625 Total 1 527 466 1 488 625

3.5. Employee benefits

The liability for future pension payments obligations is net of the taxes which will be recovered on the future pension payments (see also 2.4).

(EUR) 31 December 2009 31 December 2008 Gross amount 68 741 798 63 730 921 Tax rate (%) 17,57 17,57 Taxes 12 077 934 11 197 523 Amount net of taxes 56 663 864 52 533 398 Variation of net pension liability 4 130 466 10 665 938

The pension plan devoted to the members is a defined benefit plan. The defined benefits in this context are:

— transitional allowance (paid at the end of the mandate for three years),

— retirement pension,

— invalidity pension and allowance,

— survivor's pension (paid after the death of the Member whether this happens during or before retirement),

The categories of beneficiaries, for which the liability needs to be calculated, are:

— the active members,

— the non-active members with a transitional allowance,

— the non-active members after the transition period (deferred pension),

— the retired members,

— permanently disabled,

— temporarily disabled,

— the surviving spouses,

— the orphans.

The computation of the liability is performed by Eurostat assisted by a qualified independent expert with regard to the implementation of the methodology and to the definition of the corresponding actuarial assumptions.

The assessment of the pension liability requires the handling of variables related to economic and demographic aspects. Values that are affected to these variables can be based on information collection, estimated, or even fixed arbitrarily.

Amongst the main actuarial assumptions were the estimated nominal discount rate, 4,1 % in December 2009, the expected long-term inflation, 2,3 % in December 2009 and the general salary growth, 0 % in December 2009. The values affected in December 2008 for the same variables were respectively 3,7 %, 1,5 % and 0,3 %.

The variation of the gross pension liability during 2009 is not attributable to a change in methodology or any other unusual factor, the evolution can be explained as follows:

(EUR) Gross Pension liability at 31.12.2008 63 730 921 Liability change due to newcomers 0 Liability change linked to the characteristics of the constant population 3 958 178 Service cost of the ‘constant’ population 5 614 685 Interest cost of the ‘constant’ population 2 510 704 Pension paid during the year –2 977 454 Actuarial gains and losses from experience –1 189 757 Actuarial gains and losses from changes on assumptions 1 052 699 Interest rate 3 295 980 Life table 0 General Salary Growth –2 243 281 Other changes on actuarial assumptions 0 Actuarial gains and losses from changes on methodology and other changes 0 Gross Pension liability at 31.12.2009 68 741 798

‘Service cost’ reflects the actual value of the additional pension rights, acquired by active members and related to the service during the year.

‘Interest cost’ is due to the age increase of non-retired members; members are older and the duration between the new valuation date and the date at which they will receive their future benefits is reduced by one year.

‘Pension paid during the year’ relates to the payments during the year and is detailed in section 4.9.

‘Actuarial gains and losses’ arise from differences between what was expected from the assumption for the following year and what really occurred during the year.

3.6. Other long-term liabilities

The amount of EUR 175 000 is contractually due at the termination of the rental of the building K9.

3.7. Provision for risks and charges

The Commission has introduced an appeal in the Court of Justice further to the adaptation of the EU staff remunerations decided by the Council in December 2009 (1,85 %), lower than the adaptation proposed by the Commission (3,7 %).

The amount of EUR 650 000 is an estimate, net of taxes, of the disputed amount for the Court of Auditors staff and corresponds to an increase of 1,85 % from 1 July 2009 to 31 December 2009.

3.8. Accounts payable

(EUR) 31 December 2009 31 December 2008 Current payables 548 543 540 605 Sundry payables related to payroll and staff 425 994 427 175 Accrued charges — non-EU institutions 4 161 463 5 918 135 Accrued charges — EU institutions 874 060 753 963 Accounts payable against consolidated EU entities mainly to the European Council and Parliament 18 648 107 124 Total 6 028 708 7 747 002

‘Accrued charges – non-EU institutions’ include the value of untaken holidays at year end, which decreases from EUR 1 936 117 for 2008 to EUR 1 799 770 for 2009.

4. Notes to the economic outturn account

4.1. ‘Funds transferred from the Commission to other institutions’: the amount corresponds to the monthly calls for funds made by the Court to the Commission to replenish its bank account.

4.2. ‘Revenues from administrative operations’: for the most part, this heading is made up of deductions from the salaries of members and staff in respect of tax and social contributions.

4.3. ‘Other operating revenue’ arises among others from the sales of publications by the Publications Office.

4.4. ‘Staff expenses’ include the salaries of members, statutory staff, contractual agents and temporary staff. The transitional allowances for previous members and the taxes related to the members' pensions and transitional allowances are now part of the item ‘Movement in pension’ (see 4.9)

4.5. The ‘fixed assets related expenses’ consist of the depreciation/amortisation of the tangible and intangible assets.

4.6. The most significant items of the ‘other administrative expenses’:

— buildings' rental and associated charges,

— IT and telecommunications,

— missions expenses,

— cleaning and security services.

4.7. ‘Financial revenues’ consists of bank interest earned on the Court's current account.

4.8. ‘Financial expenses’ are bank charges levied on the Court's current account.

4.9. The item ‘Movement in pensions’ includes all expenses linked to the pensions of the Members of the Court. This covers the pensions and transitional allowances paid during the year as well as the adjustment at year end of the liability for all future pension payments.

Since the pension liability now includes the expenses of transitional allowances, the transitional allowances paid during the year should also be part of the item ‘Movement in Pensions’. This was not disclosed as such in the financial statements 2008 in which the transitional allowances (1 095 429 EUR) and the taxes deducted from payments (– 382 779 EUR) were reported as ‘Staff expenses’.

In accordance with EC accounting rule 14 and as detailed in the table below, the two amounts need to be reclassified to restate 2008 figures and ensure proper comparative information between 2008 and 2009. This reclassification does not impact the final economic result of the year nor the balance-sheet.

(EUR) 2009 2008 Restated 2008 Financial Statements Variation of members' net pension liability 4 130 466 10 665 938 10 665 938 Life pension paid 2 020 586 1 750 629 1 750 629 Survivor pensions paid 356 249 346 908 346 908 Transitional allowances paid 542 642 1 095 429 — Invalidity pensions paid 57 977 — — Sub-total Pension paid during the year 2 977 454 3 192 966 2 097 537 Taxes deducted from payments – 386 534 – 382 779 — Total Movement in pension 6 721 386 13 476 125 12 763 475

5. Off balance sheet

5.1. Contingent assets

The following bank guarantees have been given by suppliers following contractual obligations:

(EUR) 31 December 2009 Travel agency 100 000 Renovation building K1 545 951 Project management building K3 578 000 Car pool leasing 75 000 Insurance company 1 361 Telecommunication 20 000 Total 1 320 312

5.2. Commitments for future funding

(EUR) 31 December 2009 Operational lease for Buildings 11 683 829 Operational lease for IT material, cars and other equipments 1 001 910 Subtotal 12 685 739 Commitments against appropriations not yet consumed — (‘Restant à liquider’) —, after deduction of accruals for 2010 56 918 665 Total 69 604 404

The RAL is an element of budgetary accounting representing the value of outstanding commitments. This is the difference between commitments entered into and payments, which is due to the time-lag between entering into a commitment and proceeding to the related payment.

The increase of the RAL compared to last year is due to the construction of the new building K3.

5.3. The Court's buildings projects

The Court occupied its headquarters building (the ‘K1’ building) in 1988 and purchased it and the land it stands on outright in 1990. In 1999, the Court signed a framework agreement with the Luxembourg State through which it was given the right to use a second parcel of land for 49 years (renewable once) for the construction of an extension (the ‘K2’ building) in return for a payment of one euro. However for the second extension, the ‘K3’ building, due to different arrangements for carrying out the project it was necessary that the Luxembourg State and the Court concluded a new framework agreement on 22 February 2008.

As regards the two pieces of land relative to the two extensions (‘K2’ and ‘K3’) mentioned above, the State has sold these to the Court for a symbolic one euro. For its part should the Court ever consider ceding one or other of the buildings to a third party other than the Community body or institution, the Court will return the land to the ownership of the State in return for a symbolic one euro, the latter disposing also of an option to buy the building at a price to be determined by an independent expert. In case the State decides not to exercise this option, it would provide a right to use the land to the purchasers of the building.

In Luxembourg, the use of office buildings is authorised for a period of 15 years, after which they must be modernised to bring them into conformity with the prevailing health, safety and environmental standards. These required health and safety works were performed on the K1 building over the last 2 years. Although the works can be considered as globally finalised, the formal final acceptance will be confirmed in 2010. The K2 building entered into service in November 2003 and has thus an authorisation (‘autorisation d’exploitation’) valid until 2018.

The works for the construction of the K3 building started in March 2010. The first tranche of financing of 55 million EUR was included in the 2009 budget. Part of it was spent in 2009 and the difference is included in the ‘Restant à liquider’ (see point 5.2). This difference covers contracts with construction companies, to be signed in 2010. On 15 June 2009, following an open call for tender, the Court signed a service contract with a consortium to be the project manager for the construction of the K3 building. Amongst other things it is the responsibility of the project manager to procure and sign contracts with the construction companies on behalf of the Court, to monitor the execution of the works and to check the relevant invoices before payment. Once the invoices are verified and authorised for payment by the responsible services of the Court it is the responsibility of the project manager to pay the construction companies. Within the above context, the project manager enters into financial commitments towards the construction companies. As a counter-balance to this, the contract between the Court and the project manager requires the Court to have sufficient funds, within the limits of what is available in the budget, to cover the liabilities of the project manager vis-à-vis the construction companies. To ensure this, the Court has signed a fiduciary contract with a local bank and thus holds the funds made available by the budgetary authority. The financial interest of the Union is at the same time protected by the use of the fiduciary contract.

5.4. Potential liability for litigations

None.