Report on the annual accounts of the European Aviation Safety Agency for the financial year 2004 together with the Agency's replies
Date: 2005-10-05
Institutions: European Court of Auditors
Subjects: European Aviation Safety Agency, European Court of Auditors, administration of the Institutions, financial control, interinstitutional relations (EU), operating result, report

28.12.2005

EN

Official Journal of the European Union

C 332/1

I

(Information)

COURT OF AUDITORS

on the annual accounts of the European Aviation Safety Agency for the
financial year 2004 together with the Agency’s replies

REPORT

(2005/C 332/01)

CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE COURT’S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-2

3-6

7-11

Tables 1 to 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Agency’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

2

2

3

7

Paragraph

Page

C 332/2

EN

Official Journal of the European Union

28.12.2005

INTRODUCTION

Reliability of the accounts

1.
The European Aviation Safety Agency (hereinafter called
the Agency) was established by Regulation (EC) No 1592/2002 of
the European Parliament and of the Council of 15 July 2002 (1).
The financial year 2004 was the second in which the Agency
actually carried out its operating activities. The Agency’s tasks are
to maintain a high level of civil aviation safety, to ensure the
proper functioning and development of civil aviation safety, to
establish certification specifications and to provide certification of
aeronautical products. Table 1 summarises the competences
and activities of the Agency on the basis of information supplied
by it.

For information, the annual accounts drawn up by the
2.
Agency for the financial year 2004 are presented in summary
form in Tables 2, 3 and 4.

THE COURT’S OPINION

3.
The Court’s opinion is addressed to the European Parlia-
ment and the Council in accordance with Article 185(2) of Coun-
cil Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up
following an examination of the Agency’s accounts, as required
by Article 248 of
the Treaty establishing the European
Community.

4.
The Agency’s accounts for the financial year ended
31 December 2004 (3) were drawn up by its Executive Director,
pursuant to Article 49 of Regulation (EC) No 1592/2002, and
sent to the Court, which is required to give its opinion on their
reliability and on the legality and regularity of the underlying
transactions.

5.
The Court conducted an audit in accordance with its poli-
cies and standards, which are based on international auditing
standards that have been adapted to the Community context. The
audit was planned and performed to obtain reasonable assurance
that the accounts are reliable and the underlying transactions are
legal and regular.

The Court has obtained a reasonable basis for the opinion

6.
expressed below.

The Agency’s accounts for the financial year ended 31 Decem-
ber 2004 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

The transactions underlying the Agency’s annual accounts,
taken as a whole, are legal and regular.

The observations which follow do not call the Court’s opi-
nion into question.

OBSERVATIONS

7.
Contrary to the budgetary principle of specificity, the
Agency’s initial budget and its amending budgets, as published in
the Official Journal, do not give a breakdown of appropriations
in terms of articles and items, as required by Article 23 of the
Agency’s financial regulation.

8.
The revenue and expenditure account for the financial year
2003 showed a loss (4) of 214 000 euro. In accordance with the
provisions of the Agency’s financial regulation, this outturn ought
to have been entered in an amending budget for 2004 (5).

9.
The budgetary management suffers from a number of
anomalies: a lack of any indication in the amending budgets about
the transfers carried out or even of any reasons for these trans-
fers, failure to inform the Management Board about the transfers,
and payment of advances outside the budget.

10.
The Agency has not yet adopted the implementing rules
for its financial regulation. Neither has it carried out any risk
analysis or prepared any internal control standards.

11.
The staff selection procedures are not laid down formally
and vary from one selection to another without any apparent rea-
son. In order to improve the transparency of the decisions taken
in this regard, the Agency needs to formalise its recruitment pro-
cedures and make them more consistent.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 October
2005.

For the Court of Auditors
Hubert WEBER
President

(1) OJ L 240, 7.9.2002, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 23 August 2005 and received by

the Court on 19 September 2005.

(4) This loss was due to carry-overs of appropriations that were not cov-

ered by the budgetary revenue received.

(5) Article 16(2) of the Agency’s financial regulation.

28.12.2005

EN

Official Journal of the European Union

C 332/3

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EN

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28.12.2005

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28.12.2005

EN

Official Journal of the European Union

C 332/5

European Aviation Safety Agency — Revenue and expenditure account for the financial years 2004 and 2003 (1)

Table 3

2004

2003

(1 000 euro)

Operating revenue

Community subsidies

Other subsidies

Reimbursement of expenditure

Other revenue

Operating expenditure

Staff

Buildings and related expenditure

Other administrative expenditure

Allocation to provisions

Operating expenditure

Financial income (d)

Financial expenses (e)

7 777

248

3

350

Total (a)

8 378

5 556

689

743

89

2 081

9 158

– 780

0

2

– 2

– 782

Total (b)

Operating outturn (c = a – b)

Financial outturn (f = d – e)

Outturn for the financial year (g = c + f)

3 725

0

0

0

3 725

662

92

82

1

261

1 098

2 627

0

0

0

2 627

(1) The data for the financial year 2003 have been restated to make them comparable, following the transition to accruals-based accounting.
Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

C 332/6

EN

Official Journal of the European Union

28.12.2005

European Aviation Safety Agency — Balance sheet as at 31 December 2004 and 31 December 2003 (1)

Table 4

Assets

2004

2003

Liabilities

2004

2003

(1 000 euro)

69

27

Own capital

Outturns carried over from previous financial
years

Outturn for the financial year

2 627

– 782

12

0

0

Current liabilities

Current accounts payable

12

Sundry accounts payable

Amounts owed to Community institutions and
bodies

0

2 627

2 627

112

6

32

150

Subtotal

1 845

549

61

3 843

Subtotal

4 453

Intangible assets

Tangible assets

Computer equipment

Furniture and vehicles

Other fittings and equipment

Current assets

Prefinancing

Sundry accounts receivable

Other accounts receivable

Subtotal

Amounts owed by Community institutions and
bodies

Subtotal

376

285

261

922

70

171

68

20

329

Liquid assets

4 978

Total

6 298

0

5

5

1

11

2 727

2 777

(1) The data for the financial year 2003 have been restated to make them comparable, following the transition to accruals-based accounting.
Source: Agency data — This table summarises the data supplied by the Agency in its annual accounts.

Total

6 298

2 777

28.12.2005

EN

Official Journal of the European Union

C 332/7

THE AGENCY’S REPLIES

The Agency has taken into account the Court’s observa-
7.
tion. The budget for the financial year 2005 and the preliminary
draft budget for 2006 were adopted with the breakdown required
by the regulations.

The Agency has taken into account the loss recorded in
8.
2003 in the revenue and expenditure account for the financial
year 2004. As the outturn recorded in 2004 was positive, it ought
not to have to be entered in an amending budget.

9.
All decisions on transfers in the financial year 2004 were
reasoned, with the exception of the first two. The Agency has

taken the necessary steps to avoid the situations described by the
Court from recurring.

10.
The implementing rules for the Agency’s financial regu-
lation were adopted by its Management Board on 14 June 2005. A
risk manager/internal auditor, whose main task shall be to carry
out risk analysis and prepare internal control standards, is being
recruited.

The Agency will endeavour to improve the transparency
11.
of its recruitment procedures, in particular by drawing up manu-
als of procedure.