EN Official Journal of the European Union C 324/30

REPORT

on the annual accounts of the European Agency for the Evaluation of Medicinal Products concerning the 2003 financial year together with the Agency's replies

(2004/C 324/05)

CONTENTS

1 INTRODUCTION

2-5 THE COURT'S OPINION

6-14 OBSERVATIONS

Tables 1 to 5

The Agency's replies

INTRODUCTION

1. The European Agency for the Evaluation of Medicinal Products (hereinafter referred to as the Agency) was created by Council Regulation (EEC) No 2309/93 of 22 July 1993 (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use. Table 1 summarises the powers and responsibilities of the Agency on the basis of the information supplied by it.

THE COURT'S OPINION

2. This opinion is addressed to the European Parliament and the Council, pursuant to Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (2).

3. The Court has examined the annual accounts of the Agency for the financial year ended 31 December 2003. In accordance with Article 57a(1) of Council Regulation (EEC) No 2309/93, the budget was implemented on the responsibility of the Executive Director. This responsibility includes the drawing-up and presentation of the accounts (3) in accordance with the internal financial provisions adopted on the basis of Article 57a(11) of the same regulation. The Court is required under Article 248 of the Treaty establishing the European Community to examine these accounts.

4. The Court carried out its audit in accordance with its auditing policies and standards, which have been adapted from generally accepted international auditing standards to reflect the specific nature of the Community context. It examined the accounting documents and applied the procedures it considered necessary in this context.

5. The Court has thus obtained reasonable assurance that the annual accounts for the financial year ended 31 December 2003 are reliable. The Court would nevertheless draw attention to the situation described in paragraph 10. Except for the situations described in paragraphs 7 and 12, the Court has obtained reasonable assurance that the underlying transactions, taken as a whole, are legal and regular.

OBSERVATIONS

6. The implementation of the appropriations for the financial year 2003 and of the appropriations carried over from the previous year is set out, in Table 2. Tables 3 and 4 set out in summary form, the revenue and expenditure account and the balance sheet published by the Agency for the financial year 2003.

7. On 5 June 2003, the Management Board of the Agency, subject to approval by the Commission, adopted a new financial regulation and corresponding implementing rules, which came into effect as of the second half of the financial year 2003 (4). In its opinion No 6/2003 of 17 July 2003, the Court had drawn attention to differences between the Agency's own financial regulation and the framework Financial Regulation applicable to the agencies in general. In paragraph 7 of its opinion, the Court emphasised in particular that the Agency's implementing rules on the award of contracts must be in line with the provisions of the general Financial Regulation and the general implementing rules. For example, whereas the general rules provide for a committee for the evaluation of tenders to be set up for any contract involving an amount exceeding 13 800 euro, the Agency sets this threshold at 75 000 euro (Table 5 sets out the differences noted).

8. The Agency's accounts for 2003 were drawn up on the basis of the accounting principles laid down by its new financial regulation (5). The accounting data relating to the financial year 2002 have not been processed again in accordance with the accounting rules used when the accounts for the financial year ended on 31 December 2003 were drawn up.

9. Article 43(1)(e) of the Agency's financial regulation provides that the accounting officer shall validate the systems laid down by the authorising officer to supply or justify accounting information. This validation has not taken place.

10. In 2003 the Agency carried out a physical inventory of fixed assets that was based on the nature of the assets, even though the fixed asset accounts are kept according to the year that the assets are acquired. This situation makes it difficult to reconcile the physical data and the accounting data. Furthermore, some assets appear in neither the inventory nor the fixed asset accounts. Their total value after depreciation was assessed at 4 188 000 euro (6) and was included in the balance sheet under the item ‘Fixed assets’. The Agency should set up a system for managing the fixed assets that ensures that the inventory data are both exhaustive and consistent with the accounting data.

11. In the application of internal control measures, continuity is not ensured. For example, certain case-files do not contain all the supporting documents required to create a commitment or a payment order.

12. In certain negotiated procedures the choice of supplier is based on the criterion of ‘former experience with the contractor’, which is not provided for in the implementing rules (7) for the financial regulation.

13. An examination of the recruitment files has brought to light a significant number of shortcomings in the formalisation and the documentation: reasons are not given to support the choice of candidates invited for interview or check-lists, which are drawn up for the purpose of verifying the admissibility of the candidates, do not include all the selection criteria set out in the vacancy notices.

14. The Agency's ‘quality assurance’ unit serves as the internal auditor. Two of its audits, carried out in 2002 on the organisation of an electronic documentation system, brought to light a significant increase in costs and time taken caused by insufficient monitoring of the project. A subsequent audit carried out by an external consultant in 2003 confirmed the weaknesses found by the internal auditor. The project undertaken at the end of 2000 ought to have started production at the beginning of 2002 at an estimated cost of 1,2 million euro. The system was still not operational in 2003 and the costs already incurred amounted to 1,7 million euro.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 29 and 30 September 2004. For the Court of Auditors Juan Manuel FABRA VALLÉS President

(1) OJ L 214, 24.8.1993, p. 18; following the adoption of Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 (OJ L 136, 30.4.2004, p. 1) the Agency's new name is the European Medicines Agency.

(2) OJ L 248, 16.9.2002, p. 1.

(3) As required under Article 83(3) of the Agency's financial regulation, the final accounts for the financial year 2003 were drawn up on 14 May 2004 and forwarded to the Court of Auditors, which received them on 24 September 2004. A summarised version of these accounts is presented in the tables attached to this report.

(4) The Commission gave its opinion at the beginning of 2004.

(5) Article 78 of the Agency's financial regulation.

(6) The sum relates to software and to alterations to the premises.

(7) Article 86 of the detailed rules for the implementation of the Agency's financial regulation.

Table 1 European Agency for the Evaluation of Medicinal Products (London) Areas of Community competence deriving from the Treaty Competence of the Agency as defined in Council Regulation (EC) No 2309/93 of 22 July 1993 Governance Resources available to the Agency (data for 2002) Products and services supplied in 2003 (data for 2002) A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities. Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases, and obviating sources of danger to human health. (Extract from Article 152 of the Treaty) Objectives — To coordinate the scientific resources that the Member States' authorities make available to the Agency for the authorisation and supervision of medicinal products for human or veterinary use — To provide the Member States and the institutions of the Union with scientific advice on medicinal products for human or veterinary use Tasks — To coordinate the scientific evaluation of medicinal products which are subject to Community marketing authorisation procedures — To coordinate the supervision of medicinal products which have been authorised within the Community (pharmacovigilance) — To advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin — To coordinate the verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice — To record the status of marketing authorisations granted for medicinal products (1) The Committee for Proprietary Medicinal Products, consisting of two members from each Member State, advises on any question relating to the evaluation of medicinal products for human use. (2) The Committee for Veterinary Medicinal Products, consisting of two members from each Member State, advises on any question relating to the evaluation of veterinary medicinal products. (3) The Management Board, consisting of two representatives of each Member State, two representatives of the Commission and two representatives appointed by the European Parliament. The Board adopts the programme of work and the annual report. (4) The Executive Director is appointed by the Management Board on a proposal from the Commission. (5) External audit: Court of Auditors. (6) Discharge is given by the Parliament on a recommendation from the Council. Final budget: 84,2 million EUR (61,3 million EUR), of which the Community contribution (excluding subsidy for orphan medicines): 22,9 % (27,9 %) Staff numbers as at 31 December 2003: 287 (251) posts provided for in the establishment plan, Posts occupied: 256 (227) +48 (37) other posts (auxiliary contracts, national experts on secondment, local staff, temporary staff) Total staff: 304 (264) Assigned to the following duties: — operational: 242 (211) — administrative: 62 (53) Medicinal products for human use Applications for marketing authorisations: 39 (31) Favourable opinions: 39 (24) Average evaluation time: 190 days (192 days) Opinions after authorisation: 941 (746) Pharmacovigilance: 45 538 reports (42 608 reports) Periodic reliability reports:276 (223) Monitoring measures: 1 025 (738) Scientific opinions: 65 (75) Procedures for mutual recognition: 4 080 (3 501) Veterinary Medicinal Products New applications: 10 (3) Applications in respect of variants: 64 (33) Inspection: 76 (75) Source:Information supplied by the Agency.

Table 2 European Agency for the Evaluation of Medicinal Products — Implementation of the budget for the 2003 financial year (million euro) Revenue Expenditure Origin of revenue Revenue entered in the final budget for the financial year Revenue collected Expenditure allocation Appropriations in the final budget Appropriations carried over from the previous financial year Appropriations available (2003 budget and financial year 2002) entered committed paid carried over cancelled outstanding commitments paid cancelled appropriations committed paid carried over cancelled Community subsidies (1) 23,0 22,5 Title I Staff 31,5 29,7 29,2 0,5 1,8 0,4 0,3 0,1 31,9 30,1 29,5 0,5 1,9 Own revenue 59,0 60,1 Title II Administration 19,7 19,2 11,9 7,3 0,5 1,9 1,5 0,4 21,6 21,1 13,4 7,3 0,9 Other revenue 2,2 1,8 Title III Operating expenditure 33,0 32,8 24,5 8,3 0,2 4,5 4,2 0,3 37,5 37,3 28,7 8,3 0,5 Total 84,2 84,4 Total 84,2 81,7 65,6 16,1 2,5 6,8 6,0 0,8 91,0 88,5 71,6 16,1 3,3 Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts.

Table 3 European Agency for the Evaluation of Medicinal Products — Revenue and expenditure accounts for the financial years 2003 and 2002 (1000 euro) 2003 2002 (2) Revenue Fees relating to marketing authorisations 58 657 38 372 Commission subsidy including subsidies received from the EEA 19 786 14 846 Community subsidy for orphan medicines 2 814 2 407 Contributions for Community programmes 1 208 9 Administrative revenue 2 153 1 688 Sundry revenue 848 54 Total (a) 85 466 57 376 Expenditure (3) Staff expenditure 29 663 26 216 Administrative expenditure 10 905 10 718 Operating expenditure 32 838 21 467 Depreciation 2 364 0 Total (b) 75 770 58 401 Result (c = a – b) 9 696 –1 025 Other factors Appropriations carried over from the previous financial year and cancelled (d) 823 1 377 Exchange-rate differences and other adjustments (e) 413 – 352 Balance for the financial year (c + d + e) 10 932 0 Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts.

Table 4 European Agency for the Evaluation of Medicinal Products — Balance sheets as at 31 December 2003 and 31 December 2002 (4) (1000 euro) Assets 2003 2002 Liabilities 2003 2002 Intangible assets 3 401 0 Own capital Budget outturn (a) 4 037 — Fixed assets Outturn after adjustments (b) 6 895 — Plant, machinery and tools 1 635 146 Economic outturn (a + b) 10 932 — Furniture and vehicle fleet 1 011 991 Outturn carried over from previous financial years (5) 6 872 2 684 Computer equipment 2 548 1 547 Subtotal 17 804 2 684 Subtotal 5 194 2 684 Current liabilities Current assets Amounts owed to Community institutions and bodies 479 444 VAT paid and to be recovered 1 105 571 Payment appropriations to be carried over 11 936 6 811 Amounts receivable from Community institutions and bodies 107 3 744 Sundry accounts payable 127 603 Sundry accounts receivable 1 034 2 854 Advances from customers 8 845 9 293 Sundry receivables 64 0 Subtotal 21 387 17 151 Subtotal 2 310 7 169 Available assets 28 286 9 982 Total 39 191 19 835 Total 39 191 19 835 Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts.

Table 5 Differences between the general implementing rules and the Agency's implementing rules Committee for the evaluation of tenders (6) Articles 145 and 146 of the general implementing rules Article 107 of the Agency's implementing rules Contract threshold: 13 800 euro 75 000 euro Rules for negotiated procedures in respect of low-value contracts Value of contracts Article 129 of the general implementing rules Article 89 of the Agency's implementing rules less than 200 euro payment of costs against invoices provided for in Article 82 but threshold unspecified less than 1 050 euro: negotiated procedure award on the basis of a single tender less than 1 500 euro: award on the basis of a single tender between 1 050 and 13 800 euro: negotiated procedure with: at least 3 candidates consulted between 1 500 and 13 800 euro: at least 3 candidates consulted between 13 800 and 50 000 euro, restricted procedure but without a CEI (7) with: at least 5 candidates consulted at least 3 candidates consulted Source:Court of Auditors. (1) Includes subsidies received from the European Economic Area. Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts. (2) The data for the financial year 2002 have not been reprocessed according to the accounting principles followed for the financial year 2003 (see paragraph 8 of the report). (3) The portion of the appropriations carried over which is to be regarded as expenditure for the financial year has been evaluated on an overall basis rather than on the basis of examining individual transactions. Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts. (4) Use of the model proposed by the Commission has resulted in balances being reallocated between the existing headings. (5) For 2002, the sum corresponds to the total of net fixed assets. For 2003, the sum also includes 4 188 000 euro corresponding to the activation in 2003 of assets acquired in previous years (see paragraph 10 of the report). Source:The Agency's data. This table summarises the data provided by the Agency in its own accounts. (6) The only committee for the evaluation of tenders proposed by the Agency is the Advisory Committee on Procurement and Contracts, which is required to give its opinion on contracts involving amounts exceeding 75 000 euro (Article 107), whereas this threshold is 13 800 euro in the general implementing rules. (7) CEI: Call for expressions of interest. Source:Court of Auditors.