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

C 312/12

EN

Official Journal of the European Union

19.12.2006

REPORT

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

(2006/C 312/03)

CONTENTS

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

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

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

1-2

3-6

7-11

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

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

13

13

13

15

17

Paragraph

Page

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Official Journal of the European Union

C 312/13

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement below.

The European Medicines Agency (hereinafter the Agency)
1.
was created by Council Regulation (EEC) No 2309/93 of
22 July 1993, which was
replaced by Regulation (EC)
No 726/2004 of the European Parliament and of the Council of
31 March 2004 (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 super-
vision of medicinal products for human or veterinary use.

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

This Statement is addressed to the European Parliament
3.
and the Council in accordance with Article 185(2) of Council
Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up fol-
lowing an examination of the Agency’s accounts, as required by
Article 248 of the Treaty establishing the European Community.

7.
As regards the implementation of the budget, the utilisa-
tion rates for commitment appropriations (94 %) and payment
appropriations (82 %) were on the whole high. For administra-
tive expenditure (Title II), however, the utilisation rate for com-
mitment appropriations was less than 90 %, and more than 40 %
of the commitments made were carried over to the following
financial year.

The Agency’s accounts for the financial year ended
4.
31 December 2005 (3) were drawn up by its Executive Director,
pursuant to Article 68 of Regulation (EC) No 726/2004, and sent
to the Court, which is required to give a Statement of Assurance
on their reliability and on the legality and regularity of the under-
lying transactions.

The access rights to the computer system did not always
8.
correspond to the delegations in force. In 2005, a member of
staff, who had had no delegation since 2004, still had the corre-
sponding access rights to the computer system.

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 214, 24.8.1993, p. 18 and OJ L 136, 30.4.2004, p. 1. Pursuant
to the latter Regulation the Agency’s original name, the European
Agency for the Evaluation of Medicinal Products, was changed to
European Medicines Agency.

(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 27 June 2006 and received by the

9.
From the end of 2004, the Agency has managed funds (4)
collected from other Agencies and bodies to finance a common
support service to develop their financial management informa-
tion systems. Up to 2005, these funds were not presented in the
Agency’s annual accounts, as was the case with other Agencies
which managed the funds in earlier years following a rotational
system.

10.
Anomalies were found in the course of checks on the
award of contracts, especially as regards IT contracts. There were

Court on 27 July 2006.

(4) Approximately 400 000 euro.

C 312/14

EN

Official Journal of the European Union

19.12.2006

no formal decisions concerning the appointment of evaluation
committees. The rules governing the hierarchical independence of
committee members were not observed. Evaluation committee
meetings were held in the absence of some of the members, with-
out any formal justification for their absence.

The Court again notes that the contracts concluded with
11.
the banks have been in force for over six years even though the
detailed rules for the implementation of the Agency’s financial
regulation lay down that there should be a new call for tenders at
least once every five years.

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

Table 1

European Medicines Agency (London)

.

1
9
1
2
2
0
0
6

.

Areas of Community competence
deriving from the Treaty

A high level of human health
protection shall be ensured in
the definition and implementa-
tion of all Community policies
and activities.

be

Community action, which shall
complement national policies,
shall
towards
directed
improving public health, pre-
venting human illness and dis-
eases and obviating sources of
danger to human health. (…)

(Article 152 of the Treaty)

Competences of the Agency
Regulation (EC) No 726/2004 of the European Parliament
and of the Council of 31 March 2004

Objectives:

Tasks:

— to coordinate the scien-
tific resources that the
Member States’ authorities
make available to the
Agency for the authorisa-
tion and supervision of
medicinal products for
human and veterinary
use,

— to provide the Member

States and the institutions
of the European Union
with scientific advice on
medicinal products for
human or veterinary use.

— to coordinate the scien-

tific evaluation of medici-
nal products which are
subject to Community
marketing authorisation
procedures,

— to coordinate the supervi-
sion of medicinal prod-
ucts which have been
authorised within the
Community; (pharma-
covigilance),

— to advise on the maxi-

mum limits for residues
of veterinary medicinal
products which may be
accepted in foodstuffs of
animal origin,

— to coordinate verification
of compliance with the
principles of good manu-
facturing practice, good
laboratory practice and
good clinical practice,

— to record the status of

marketing authorisations
granted for medicinal
products.

Source:

Information supplied by the Agency.

Governance

Resources made available to the
Agency in 2005 (2004)

Products and Services in 2005
(2004)

1. The Committee for Medicinal Products
for Human Use, consisting of one member
and one alternate from each Member State,
advises on any question relating to the evalu-
ation of medicinal products for human use.

2. The Committee for Medicinal Products
for Veterinary Use, consisting of one mem-
ber and one alternate from each Member
State, advises on any question relating to the
evaluation of veterinary medicinal products.

3. The Committee for Orphan Medicinal
Products, consisting of one member and one
alternate from each Member State, advises on
any question relating to the evaluation of
orphan medicinal products.

4. The Committee on Herbal Medicinal
Products, consisting of one member and one
alternate from each Member State, advises on
any question relating to the evaluation of
herbal medicinal products.

5. The Management Board consisting of one
member and one alternate from each Mem-
ber State, two representatives of the Commis-
sion, two representatives appointed by the
European Parliament,
two representatives
from patients organisations, one representa-
tive from doctors organisations and one rep-
resentative
from veterinarians organisa-
tions. The Board adopts the work programme
and the annual report.

6. The Executive Director is appointed by
the Management Board on a proposal from
the Commission.

7. External audit: European Court of Audi-
tors and European Commission’s Internal
Audit Service.

8. Discharge authority: Parliament on a rec-
ommendation from the Council.

Final budget for 2005:

111,8 million euro (99,4 mil-
lion euro)

Community contribution
(excluding subsidy for orphan
medicines): 22,7 % (24,7 %)

Medicinal Products for
Human Use

— Applications for marketing
authorisations: 43 (51)

— Favourable opinions:

24 (34)

Staff numbers at
31 December 2005:

— Average evaluation time:
203 days (187 days)

379 (314) posts provided for
in the establishment plan

— Opinions after authorisa-

tion: 1 148 (926)

Posts occupied: 337,5 (290)

+ 34 (50) other posts (auxil-
iary contracts, seconded
national experts, local staff,
employment agency staff)

— Pharmacovigilance:
91 565 reports
(64 186 reports)

— Periodic reliability
reports: 279 (253)

Total staff: 371,5 (340)

— Scientific opinions:

Assigned to the following
duties:

Operational: 302,5 (271)

Administrative: 69 (69)

135 (77)

— Procedures for mutual rec-
ognition: 8 451 (7 081)

Medicinal Products for Vet-
erinary Use

— New applications: 11 (8)

— Applications in respect of

variants: 70 (40)

— Inspections: 114 (93)

Orphan Medicinal Products

— Applications: 118 (108)

— Favourable opinions:

88 (75)

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Source of revenue

Community
subsidies (1)

Own revenue

EUROPEAN MEDICINES AGENCY

Table 2

Implementation of the budget for the financial year 2005

Revenue

Revenue entered
in the final budget
for the financial
year

Revenue
collected

Allocation of expenditure

Final budget appropriations

Appropriations carried
over from the previous
financial year

Appropriations for the financial year plus
appropriations carried over from the
previous financial year

entered

commit-
ted

paid

carried
over

can-
celled

available

paid

can-
celled

available

commit-
ted

paid

carried
over

can-
celled

Expenditure

(1 000 euro)

31 180

77 455

33 734

71 895

Title I
Staff

Title II
Administration

Title III
Operating activities

41 356

39 307 38 608

700

2 048

642

536

106

41 998

39 949

39 144

700

2 154

27 105

24 047 15 974 10 041

1 090

10 935 10 590

345

38 040

34 982

26 564 10 041

1 435

43 374

42 000 33 907

8 092

1 375

11 174 10 523

651

54 548

53 174

44 430

8 092

2 026

Other revenue

3 200

3 767

Total

111 835

109 396

Total 111 835 105 354 88 489 18 833

4 513

22 751 21 649

1 102 134 586 128 105 110 138 18 833

5 615

(1)

Including subsidies received from the European Economic Area.

Revenue and expenditure account for the financial years 2005 and 2004

Balance sheet at 31 December 2005 and 2004

Table 3

Table 4

Operating revenue
Community subsidies
Revenue

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

2004

28 957
77 679
106 636

40 057
22 459
41 999
104 515
2 121
2 257
0
4 378

24 556
71 857
96 413

34 333
15 154
38 573
88 060
8 353
1 160
0
9 513

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

Assets
Fixed assets
Receivables
Cash accounts

Liabilities
Results accumulated from previous financial years
Economic result for the year
Current liabilities

(1 000 euro)

2005

2004

17 437
5 490
29 934
52 861

23 280
4 378
25 203
52 861

Total

Total

12 115
5 892
35 010
53 017

13 767
9 513
29 737
53 017

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19.12.2006

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Official Journal of the European Union

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THE AGENCY’S REPLIES

The high carry-over 2004-2005 on Title 2 is mainly due
7.
to the Telematics expenditure programme, which accounts for
80 % of the carry-overs. The Telematics carry-overs were high
because this programme comprises a number of large and com-
plex multi-annual projects covering the whole EU that stretched
from 2004 through into 2005.

8.
Security access has been rectified and all delegated autho-
rising officers were instructed that they must take care to sign the
right transaction (in SI2) based on the delegation decision and
that they must act with due diligence in this regard.

9.
The CSS expenditure for 2006 will be included in the
EMEA budget with the first Amending Budget and the costs will
be charged to the members. Disclosure of the CSS activities in
2005 has been made in note 4 of the EMEA 2005 Accounts.

The composition of evaluation committees, often made
10.
up of more than three persons, is based on the principle that bids
should be evaluated by persons both independent and with
appropriate expertise. In any case, a minimum of three persons
participate to the meetings and the minutes for each meeting are
distributed for discussion and approval. In the future, the Agency
will request that minutes include a justification in case of absence
of a member.

11.
In 2006, the Agency has launched a tender for banking
services. The delay mentioned by the Court is due to the fact that
over the last years, the financial system of the Agency has been
overhauled and it would have been too disruptive to implement
a change of bank.