Report on the annual accounts of the European Environment 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 Environment Agency, administration of the Institutions, financial control, interinstitutional relations (EU), report

C 312/36

EN

Official Journal of the European Union

19.12.2006

REPORT

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

(2006/C 312/07)

CONTENTS

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

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

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

1-2

3-6

7-11

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

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

37

37

37

39

41

Paragraph

Page

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Official Journal of the European Union

C 312/37

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
opinion expressed below.

1.
The European Environment Agency (hereinafter called the
Agency) was established by Council Regulation (EEC) No 1210/90
of 7 May 1990 (1). It is responsible for setting up an observation
network that provides the Commission, the Member States and,
more generally, the public with reliable information on the state
of the environment. This information should, in particular, enable
the European Union and the Member States to take action to safe-
guard the environment and assess the effectiveness of such action.

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 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 of Assurance is addressed to the European
Parliament and the Council in accordance with Article 185(2) of
Council 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 2005 (3) were drawn up by its Executive Director,
pursuant to Article 13 of Regulation (EEC) No 1210/90, and sent
to the Court, which is required to give its opinion on their reli-
ability 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.

(1) OJ L 120, 11.5.1990
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 21 June 2006 and received by the

Court on 3 July 2006.

7.
The agency committed nearly all the appropriations in its
budget for the financial year 2005. Nevertheless, it is noted that
the carry-over rate (over 30 %) for commitments for its operating
activities (Title III) is high. The Agency should ensure a reduction
in carry-overs, whose volume hampers the management of the
following year’s appropriations, which subsequently creates
delays in implementation or even increases them.

There is no description of the internal control systems. The
8.
authorising officers have not provided a formal description of the
systems that they use for supplying and substantiating accounts
information and the accounting officer has therefore still not been
able to validate them.

There are shortcomings in the authorising officer’s annual
9.
activity report. This report does not supply adequate information
on the results of the year’s activities in relation to the objectives
established, the associated risks, the use of resources and the func-
tioning of the internal control systems.

During the audit of the procedures for the recruitment of
10.
temporary staff, it was observed that certain internal provisions
concerning the joint nature of the selection committees and the
inalterability of the selection criteria adopted beforehand did not
comply with the provisions of the conditions of employment of
other servants of the Communities.

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Official Journal of the European Union

19.12.2006

In the procurement field, the Court found shortcomings
11.
in respect of evaluation criteria. There is no specific information
on how information on prices should be taken into account. This

situation leads to unjustified discrepancies in the appraisal of
tenders (1).

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) This was the case for a contract worth 87 000 euro.

Table 1

European Environment Agency (Copenhagen)

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Council Regulation (EEC)
No 1210/90 of 7 May 1990

Governance

Resources made available
to the Agency
(2004)

Products and services supplied
in 2005

Environment policy

Objectives:

Tasks:

1. Management Board

Final budget for 2005

taking

protection

Community policy on the envi-
ronment shall aim at a high level
of
into
account the diversity of situa-
tions in the various regions of
the Community. It shall be based
on the precautionary principle
and on the principles that pre-
ventive action should be taken,
damage
that
should as a priority be rectified
at source and that the polluter
should pay. (…) In preparing its
policy (…), the Community shall
take account of available scien-
tific and technical data (…)

environmental

(Article 174 of the Treaty)

information

Setting up of a European envi-
ronment
and
observation network to pro-
vide the Community and the
Member States with reliable
information so that they are
able to:

(a) take the requisite action to
protect the environment;

(b) evaluate its implementa-

tion;

(c) ensure that the public is
informed about the

well
state of the environment.

— to supply the Community and the Mem-
ber States with the requisite informa-
tion,

— to record and evaluate data on the state
of the environment and to report on its
quality,

— to ensure that environmental data are

comparable at European level,

— to promote the incorporation of Euro-
pean environmental data into interna-
tional programmes,

— to publish a report every five years on
the state of, changes in and outlook for
the environment;

— to encourage the development of envi-
ronmental forecasting techniques and
methods of assessing the cost of damage
caused to the environment, and the
exchange of information on damage-
prevention technology.

— to encourage the development of meth-
ods of assessing the cost of damage
caused to the environment and the costs
of prevention, protection and restora-
tion policies for the environment.

Consisting of:

— one

representative

per

Member State,

— two representatives of the

Commission,

— two scientists appointed by
the European Parliament.

Task

To adopt the work programme
and ensure it is implemented.

2. Executive Director

Appointed by the Management
Board on a proposal from the
Commission.

32,1 million euro (31,1 million
euro)

Community
(87 %).

subsidy: 84 %

Staff numbers at 31 Decem-
ber 2005

Number of posts in the estab-
lishment plan: 115 (115) posts

Posts occupied: 107 (102)

+ 34 (15) other posts (auxiliary
contracts, seconded national
and
experts,
employment-agency staff)

local

Total staff numbers: 115 (115)

assigned to the following tasks:

3. Advisory Forum

Consisting of one representa-
tive per Member State,
it
advises the Executive Director.

— operational: 72 (72)

— administrative: 42 (42)

— mixed: 1 (1)

4. Scientific Committee

Consisting of qualified figures
in the field of the environment
appointed by the Management
Board.

5. External audit

European Court of Auditors.

6. Discharge Authority

Parliament on a recommenda-
tion by the Council.

Source:

Information supplied by the Agency.

— launch of the report on the
state of, trends in and pros-
pects for the environment
entitled ‘The European envi-
ronment: state and outlook
2005’,

— implementation of base indi-
cators concerning the state
of the environment as an
operational part of the AEE’s
environmental
information
system,

— launch of

the process of
‘Streamlining
European
2010 Biodiversity Indica-
tors’,

— launch of two new topic cen-
tres on biodiversity and
resource and waste manage-
ment,

— seminars organised under
the Presidency of the Coun-
cil,

— assistance in harmonising

data,

— management of the EIONET
network (European Environ-
ment
and
Information
Observation Network).

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EUROPEAN ENVIRONMENT AGENCY

Table 2

Implementation of the budget for the financial year 2005

Origin of Revenue

Revenue

Revenue entered
in the final budget
for the financial
year

Revenue
collected

Allocation of expenditure

Appropriations under the final budget

Expenditure

Appropriations carried over
from the previous financial
year

Appropriations for the financial year and the
previous financial year

(1 000 euro)

entered

commit-
ted

paid

carried
over

cancelled available

paid

cancelled available

commit-
ted

paid

carried
over

cancelled

Community subsidies

26 900

26 900

Other subsidies

4 444

7 438

Other revenue

Earmarked revenue

p.m

800

218

745

Title I
Staff

Title II
Administration

Title III
Operating activities

Earmarked revenue

14 468 14 468 13 958

508

3 857

3 856

2 960

895

13 019 13 018

8 942

4 069

800

720

277

523

2

2

8

0

436

319

117

14 904 14 904 14 277

508

119

396

346

50

4 253

4 252

3 306

895

52

4 853

4 647

206

17 872 17 871 13 589

4 069

2 208

536

28

3 008

2 928

813

2 167

214

28

413

Total

32 144

35 301

Total 32 144 32 062 26 137

5 995

12

7 893

5 848

401

40 037 39 955 31 985

7 639

Table 3

Table 4

Economic outturn account for the financial year 2005 (1)

Balance sheet at 31 December 2005 and 2004 (1)

Operating revenue
Community subsidies
Other subsidies/revenue

Operating expenditure
Staff
Administration
Operations

Other income (d)
Other charges (e)

(1 000 euro)

2005

26 900
5 633
32 533

13 423
5 321
15 618
34 362
– 1 829
29
– 7
– 1 807

Total (a)

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

Economic result (f = c + d + e)

Assets
Fixed assets
Receivables
Cash

Liabilities
Accumulated surplus/deficit
Economic result for the year
Current liabilities

(1 000 euro)

2005

2004

2 105
2 661
4 491
9 257

6 050
– 1 808
5 015
9 257

Total

Total

1 710
5 839
1 181
8 730

6 050
0
2 680
8 730

(1) The data for 2004 have been adapted to make them comparable to those for the financial year 2005

(1) The data for the financial year 2004 are not shown because they are not comparable with those for 2005 due to a

change in accounting methods.

Source:

Information supplied by the Agency — These tables summarise the data provided by the Agency in its annual accounts.

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19.12.2006

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Official Journal of the European Union

C 312/41

THE AGENCY’S REPLIES

The percentage carry-over has been reduced progressively
7.
in recent years and dropped to 31 % for Title III in 2005. Given
that most of our Title III contracts for example with topic centres
allow work until the end of the calendar year with final deliveries
and payments of up to 30 % in the following year, it is difficult to
reduce Title III carryover much further than currently achieved.

8.
The internal control systems are under continuous devel-
opment. It is recognised that the authorising officers have not
provided a formal description of the systems they use and this
will be done as soon as possible within the development and
documentation of our system.

9.
EEA has tried for 2003 and 2004 to accommodate the
requirements of the annual activity report within the Annual

Report required under EEA’s founding regulation. EEA has not
been able to do so and hence from 2005 onwards it produces
separate reports. The two 2005 reports were sent to the Court
and others on 15 June 2006.

As from 2006, the Staff Committee has been requested
10.
to appoint an equal number of representatives in accordance with
article 3 of annex III of the Staff Regulations. The selection crite-
ria laid down in the notice of competition are explicitly now the
sole criteria for selection of candidates.

11.
From the start of 2006 for all procurement procedures,
the Agency explains and documents in more detail the way price
is taken into account (for example the formula used for scoring
price and the evaluation criteria).