Report on the annual accounts of the European Maritime Safety Agency for the financial year 2005 together with the Agency's replies
Date: 2006-09-28
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Maritime Safety Agency, administration of the Institutions, financial control, interinstitutional relations (EU), report

C 312/30

EN

Official Journal of the European Union

19.12.2006

on the annual accounts of the European Maritime Safety Agency for the
financial year 2005 together with the Agency’s replies

REPORT

(2006/C 312/06)

CONTENTS

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

STATEMENT OF ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

1-2

3-6

7-12

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

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

31

31

31

33

35

Paragraph

Page

19.12.2006

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Official Journal of the European Union

C 312/31

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement expressed below:

1.
The European Maritime Safety Agency (hereinafter called
the Agency) was set up by Regulation (EC) No 1406/2002 of the
European Parliament and of the Council of 27 June 2002 (1). The
Agency’s tasks are to ensure a high level of maritime safety and
prevention of pollution by ships, to provide the Commission and
the Member States with technical assistance, to monitor the
implementation of Community legislation and to evaluate its
effectiveness.

2.
Table 1 summarises the Agency’s competences and activi-
ties. Key information from the financial statements drawn up by
the Agency for the financial year 2005 is presented in Tables 2, 3
and 4.

Reliability of the accounts

The Agency’s accounts for the financial year ended 31 Decem-
ber 2005 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 State-
ment into question.

STATEMENT OF ASSURANCE

OBSERVATIONS

3.
This Statement is addressed to the European Parliament
and the Council in accordance with Article 185(2) of Council
Regulation (EC, Euratom) No 1605/2002 of 25 June 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.

7.
The implementation of the budget for the financial year
2005 was affected by delays observed in staff recruitment, as
shown by the commitment rate of less than two-thirds of the
budgeted appropriations under Title I (staff expenditure). This
situation had repercussions on the utilisation of appropriations
for administrative expenditure (Title II, with two-thirds of appro-
priations committed) and,
in particular, on the utilisation of
appropriations for operating activities (Title III), with a payment
rate of only 33 %.

4.
The Agency’s accounts for the financial year ended
31 December 2005 (3) were drawn up by its Executive Director,
pursuant to Article 18 of Regulation (EC) No 1406/2002, and
sent to the Court, which is required to give a Statement of Assur-
ance as to their reliability and 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.

(1) OJ L 208, 5.8.2002, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 16 June 2006 and received by the

Court on 3 July 2006.

8.
The Court notes that activity-based management has not
been brought in, even though the Agency’s financial regulation
made provision for its introduction, on the model that was
applied to the general budget with a view to better monitoring of
performance. In this context, achieving the Agency’s aims should
not mean merely carrying out a set of tasks. It should rather be
assessed in terms of contribution to the goals laid down in the
Agency’s basic Regulation. The Agency’s work programme
should, in principle, express this contribution in operational and
measurable terms.

9.
The computerised accounting system for the general
accounts allows direct changes to be made to accounting records
without corrective journal entries. This situation involves signifi-
cant risks from the point of view of the integrity of the accounts
and should be rectified as soon as possible. Moreover, the register
of liabilities to be entered in the balance sheet should be checked
more carefully:
least
92 000 euro (i.e. almost 10 % of current liabilities) correspond-
ing to goods and services not yet received at 31 December 2005.

they are actually overestimated by at

C 312/32

EN

Official Journal of the European Union

19.12.2006

The documentation of transactions, a prerequisite for a
10.
valid system of internal control, shows some weaknesses. Files
which relate to commitments and payments are often incomplete
or confused, which makes transactions difficult to trace. It is also
difficult to monitor contracts entered into by the Agency. Infor-
mation is dispersed across several lists. It is difficult to ascertain
the total number of contracts concluded during the financial year
and the number of contracts in progress. The system of control
must be tightened up, beginning with the adoption of minimum
standards for administrative and control procedures, including
the nature and organisation of data.

11.
Contract clauses which provide for pre-financing are not
standardised with regard to the provision of bank guarantees.

Thus, for four contracts for approximately equivalent sums, a
guarantee was required in two cases but not in the other two. In
two cases, moreover, the advance payments provided for were
made, although the guarantees were invalid.

12.
There are various shortcomings in the management of
public procurement. For one contract made up of several lots, the
composition of the tender evaluation committee did not comply
with the regulatory requirements (1). In addition, the file concern-
ing
incomplete
documentation (2).

contained

awarding

one

the

lot

of

This report was adopted by the Court of Auditors in Luxembourg at
28 September 2006.

its meeting of

For the Court of Auditors
Hubert WEBER
President

(1) The tender evaluation committee consisted of members of the same
unit, although the applicable provisions laid down that at least two
organisational entities should be represented on tender evaluation
committees.

(2) In respect of lot 3, the enterprise chosen had not submitted documen-
tary evidence of its technical capacity to carry out the required tasks.

European Maritime Safety Agency (temporary headquarters in Brussels, planned relocation to Lisbon)

Table 1

Areas of Community competence
deriving from the Treaty

Competence of the Agency as defined in Regulation (EC) No 1406/2002 of the European
Parliament and of the Council of 27 June 2002 as amended by Regulations
(EC) No 1644/2003 of 22 July 2003 and No 724/2004 of 31 March 2004

Governance

Resources made available
to the Agency
(2004)

Common transport policy

Objectives:

Tasks:

1. Administrative Board

Final budget for 2005:

‘The Council may, acting by a
qualified majority,
decide
whether, to what extent and by
what procedure appropriate
provisions may be laid down
for sea and air transport.’

(Article 80 of the Treaty)

— to ensure a high, uniform
and effective level of mari-
time safety and prevention
of pollution by ships,

— to provide the Member
States and the Commis-
sion with technical and
scientific assistance,

— to monitor the implemen-
tation of Community leg-
islation in this field and to
evaluate the effectiveness
of the measures in place,

— to introduce operational
methods for combating
pollution in European
waters.

Source:

Information supplied by the Agency.

35,3 million euro (13,3 mil-
lion euro)

Community
100 % (100 %)

contribution:

Total staff at 31 Decem-
ber 2005:

95 (55) posts in the establish-
ment plan

No of posts occupied: 80 (34)

+ 20 (9) other posts (auxiliary
contracts, seconded national
experts,
staff,
employment-agency staff)

local

Total staff numbers: 100 (43)

assigned to the
duties:

following

— operational tasks: 65 (27)

— administrative tasks: 27

(13)

— mixed tasks: 8 (3)

— to assist the Commission in drawing up Commu-

Composition

nity legislation and in its implementation,

— to monitor the overall functioning of the Com-
munity port State control regime, which may
include visits to the Member States,

— to provide the Commission with technical assis-

tance for the port State control of ships,

— to work with the Member States on developing
technical solutions and to provide technical assis-
tance related to the implementation of Commu-
nity legislation,

— to promote cooperation between riparian States

in the shipping areas concerned,

One representative per Mem-
ber State, four representatives
of the Commission, four rep-
resentatives, without the right
to vote, from the professional
sectors concerned.

Tasks

— to adopt the budget and
the work programme,

— to examine requests from
Member States for assis-
tance.

— to develop and operate any information system

2. Executive Director

Appointed by the Administra-
tive Board on a proposal from
the Commission.

3. External audit

Court of Auditors.

4. Discharge Authority

Parliament on a recommenda-
tion from the Council.

necessary,

— to facilitate cooperation between the Member
States and the Commission in the development
of a common methodology for investigating
maritime accidents,

— to provide the Commission and the Member
States with reliable information on maritime
safety and on pollution by ships,

— to assist the Commission and the Member States
in the identification and pursuit of ships making
unlawful discharges,

— to monitor the classification societies recognised
by the EU and to issue the corresponding reports
to the Commission,

— to assist the Commission with the input for
and implementation of tasks relating to the Direc-
tive on marine equipment,

— to provide the Commission with data on the
introduction of the Directive on ship waste recep-
tion facilities in European ports.

.

1
9
1
2
2
0
0
6

.

Products and services supplied
2005

Number of specifications
and guideline documents:
29

Inspections/Audits: 40

Investigations: 10

Seminars: 22

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EUROPEAN MARITIME SAFETY AGENCY

Table 2
Implementation of the budget for the financial year 2005

Revenue

Expenditure

(1 000 euro)

Allocation of expenditure

Final budget appropriations for the financial year

Available appropriations
(appropriations for the
financial year plus
appropriations carried over
from the previous
financial year)

Available appropriations
(appropriations for the financial year and
appropriations carried over from the
previous financial year)

entered

com-
mitted

paid

carried
over

can-
celled

avail-
able

paid

can-
celled

avail-
able

com-
mitted

paid

carried
over

cancelled

9 788

6 224

6 063

161

3 564

143

62

2 898

1 939

1 598

333

967

684

640

81

44

9 931

6 366

6 124

161

3 645

3 582

2 623

2 237

333

1 011

Origin of revenue

Revenue entered
in the final budget
for the financial
year

Revenue
received

Community subsi-
dies

35 360

16 060

Other revenue

0

8

Total

35 360

16 068

Title I
Staff (NDA)
Title II
Administration (NDA)
Title III
Operating activities (DA)
— CA
— PA

22 674
22 674
Total CA 35 360
Total PA 35 360

21 551
0
29 714
0

0
7 515
0
15 176

0
0
494
494

1 124
15 159
5 655
19 690

827
827

702
702

125
125

21 551
0
30 540

22 674
22 674
36 187
36 187

0
7 515

15 876

0
0
494
494

1 124
15 159
5 780
19 815

NDA: non-differentiated appropriations (commitment appropriations equal payment appropriations).
DA:
CA:
PA:

differentiated appropriations (commitment and payment appropriations may differ).
commitment appropriations in a system of differentiated appropriations.
payment appropriations in a system of differentiated appropriations.

Table 3
Revenue and expenditure account for the financial year 2005 (1)

Balance sheet at 31 December 2005 and 31 December 2004 (1)

Table 4

Operating revenue
Community subsidies

Operating expenditure
Staff
Administration
Operating activities

Other income (d)
Other charges (e)

Total (a)

Total (b)
Operating result (c = a – b)

Economic result (f = c + d – e)

(1 000 euro)

2005

15 656
15 656

6 099
2 194
2 925
11 218
4 438
0
3
4 435

(1) The data for the financial year 2004 have not been presented since they are not comparable with the 2005 data

because of the change in the accounting methods applied.

Source: Agency data — These tables summarise the data provided by the Agency in its annual accounts.

Assets
Fixed assets
Receivables
Cash accounts

Liabilities
Accumulated surplus
Economic result for the year
Current liabilities

2005

524
5 456
8 866
14 846

2 750
4 435
7 661
14 846

Total

Total

(1 000 euro)

2004

206
138
9 754
10 098

0
2 750
7 348
10 098

(1) The data for the financial year 2004 have been restated to make them comparable with the 2005 data.

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19.12.2006

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Official Journal of the European Union

C 312/35

THE AGENCY’S REPLIES

The implementation of the budget for the financial year
7.
2005 did suffer from delays in recruitment. A recruitment plan
has been established in order to prevent similar delays in 2006.
For Titles II and III the payment rates should be higher in 2006,
especially for anti-pollution for which contracts have already been
signed and payments scheduled.

field of commitments, payments and the award of contracts. A
control list of the supporting documents to be included in a con-
tract award file will be made available to the staff concerned. The
database concerning the monitoring of contracts concluded by
the Agency will be updated as soon as possible. These various
actions should result in a strengthening of internal control.

An activity-based budget management document was pre-
8.
sented at
the Agency’s Administrative Board meeting in
June 2006. This document describes the different activities of the
Agency and relates them to the corresponding budgets. This ini-
tial activity-based management approach will be refined during
the second half of 2006.

Since April 2006, the Agency has been using ABAC, the
9.
Commission’s accounting system, which does not allow account-
ing records to be changed without corrective journal entries. Fol-
lowing the Court’s observation, particular attention will be given
to the register of liabilities to be entered into the balance sheet
within the framework of the procedure for processing the auto-
matic carry-overs for 2006-2007.

10.
Following an observation by the Court, the Agency’s
financial service has revised the control lists, in particular in the

11.
Following an observation by the Court, harmonisation of
the processing of advance payments and associated guarantees
will be introduced. New contract models are being used in order
to prevent guarantees received from no longer being valid when
payments are modified.

12.
The call for tenders for anti-pollution services was highly
complex and had involved five committees composed of
24 experts from the Agency. Because of the specificity of this con-
tract, it was impossible to include external experts, who were
replaced by independent observers in the final evaluation com-
mittee. It is true that one company selected had not provided a list
of similar projects which it had carried out, but this request was
only conditional. The technical committee made a substantive
error in stating that the company did not fulfil the requirements.
This error was corrected at the final stage by the evaluation and
selection committee, however the reasons for this correction were
not included in the file.