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

C 312/42

EN

Official Journal of the European Union

19.12.2006

REPORT

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

(2006/C 312/08)

CONTENTS

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

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

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

1-2

3-6

7-13

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

The Authority’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43

43

43

45

47

Paragraph

Page

19.12.2006

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Official Journal of the European Union

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INTRODUCTION

Reliability of the accounts

The European Food Safety Authority (hereinafter the
1.
Authority) was established by Regulation (EC) No 178/2002 of
the European Parliament and of
the Council of 28 Janu-
ary 2002 (1). Its main tasks are to supply the scientific informa-
tion needed for Community legislation to be drawn up, to collect
and analyse data that allow risks to be identified and monitored
and to provide independent information on these risks.

The Authority’s accounts for the financial year ended
31 December 2005 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

Except for the situation described in paragraph 12, the trans-
actions underlying the Authority’s annual accounts, taken as
a whole, are legal and regular.

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

OBSERVATIONS

STATEMENT OF ASSURANCE

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 (2); it was drawn up fol-
lowing an examination of the Authority’s accounts, as required by
Article 248 of the Treaty establishing the European Community.

4.
The Authority’s accounts for the financial year ended
31 December 2005 (3) were drawn up by its Executive Director,
pursuant to Article 44 of Regulation (EC) No 178/2002, 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.

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.

7.
The financial year 2005 was marked by a significant
under-implementation of the budget: only 80 % of commitment
and payment appropriations were used. This shows that the
Authority should make a serious effort to improve the use it
makes of the appropriations with which it is entrusted to achieve
its objectives.

8.
The Budgetary Authority had amended the establishment
plan attached to the Authority’s draft 2005 budget, as adopted by
its Management Board, in particular by significantly amending the
distribution of available posts between each grade. These amend-
ments should have resulted in a reduction of the appropriations
earmarked for expenditure on salaries and even for operating
expenditure. This reduction was not made and enabled the
Authority to restore the grades initially provided for in the draft
budget in respect of 19 posts without informing the Budgetary
Authority, by the expedient of drawing up a supplementary and
amending budget.

9.
The Court noted the failure to introduce activity-based
management although this is laid down by the Authority’s finan-
cial regulation, along the lines of what was applied to the general
budget with a view to improving performance monitoring. In this
respect the achievement of the Authority’s objectives should be
assessed in terms of its contribution to the goals set out in its
basic regulation. The Authority’s work programme should, in
principle, express this contribution in operational and measurable
terms.

The Court has thus obtained a reasonable basis for the

6.
statement expressed below.

(1) OJ L 31, 1.2.2002, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 20 June 2006 and received by the

Court on 29 June 2006.

10.
The Authority did not carry out a risk analysis or for-
mally lay down the internal control systems and procedures it fol-
lows. In several cases the Court also noted shortcomings in
expenditure control (supporting documents missing, unjustified
requests for additional services) (4).

(4) For example, the provisions governing mission expenses are not sys-

tematically observed, which results in unjustified payments.

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Official Journal of the European Union

19.12.2006

With regard to recruitment, the Authority rejected can-
11.
didates on the basis of criteria other than those provided for in the
vacancy notices and, in addition, did not observe the regulatory
provisions concerning the grades of selection board members in
relation to the posts to be filled. Candidate selection requires strict
application of the relevant criteria and an effective check on
whether the documents submitted by candidates in support of
their applications offer genuine proof.

A considerable number of anomalies were revealed dur-
12.
ing the audits carried out on the award and conclusion of con-
tracts. In a great many of the cases examined, the Court was
unable to check that the statutory minimum number of tenderers
had been invited to take part in the contracts procedure. The
Court noted that the application of the selection criteria was not

systematically documented. In several cases, rules for the appoint-
ment of evaluation committees had not been applied. In the case
of one framework contract, the clauses had not been observed.
The frequency of these anomalies is such that the Authority needs
to tighten up its internal control system in this area.

13.
The buildings intended to house the Authority perma-
nently are still not available. The Authority was thus obliged to
rent and fit out temporary premises (cost in 2005: approximately
3,5 million euro). When the Authority takes possession of its new
premises, it will again have to bear installation costs. The Author-
ity, together with the Commission, should clarify this situation
with the national authorities, in particular with a view to any
financial compensation. Pending a solution, this should be taken
into account when drawing up the budgetary estimates.

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 Food Safety Authority (Parma)

Areas of Community
competence deriving
from the Treaty

Competences of the Authority
(Regulation (EC) No 178/2002 of the European Parliament
and of the Council of 28 January 2002)

Governance

Resources made available
to the Authority in 2005
(2004)

Products and services supplied

.

1
9
1
2
2
0
0
6

.

Objectives:

Tasks:

1. Management Board

Final budget:

Free movement of goods
(Article 37 of the Treaty)

Contribution to a high level
of protection of health,
safety and protection of the
environment and of con-
sumers, taking account of
any new development based
on scientific facts (Article 95
of the Treaty)

Common
(Article 133 of the Treaty)

trade

policy

Public
cle 152(4)(b) of the Treaty)

health

(Arti-

— to provide scientific opin-
ions and scientific and
technical support for the
Community’s
legislation
and policies which have a
direct or indirect impact on
food and feed safety,

— to provide

independent
information on risks relat-
ing to food safety,

— to

to

contribute

the
achievement of a high level
of protection of human life
and health,

— to collect and analyse data
needed to allow characteri-
sation and monitoring of
risks.

Source:

Information supplied by the Authority.

36,9 million euro (29,1 million
euro); Community contribu-
tion: 100 % (100 %)

Staff
31 December:

numbers

as

at

Number of posts in establish-
ment plan: 194 (138)

Posts occupied: 124 (102)

+ 36 (37) other posts (auxil-
seconded
iary
national experts, local staff)

contracts,

Total staff: 160 (139)

Assigned to the
duties:

following

— operational: 104 (83)

— administrative: 56 (56)

— to issue scientific opinions

Composition

and studies,

— to promote uniform risk
assessment methodologies,

— to assist the Commission,

— to search for, analyse and
summarise the requisite
scientific
technical
and
data,

— to identify and characterise

emerging risks,

— to establish a network of
organisations operating in
similar fields,

— to provide scientific and
technical assistance in cri-
sis management,

— to improve international

cooperation,

— to provide

the public
and interested parties with
reliable, objective and eas-
ily comprehensible infor-
mation,

— to take part in the Com-
mission’s rapid alert sys-
tem.

14 members appointed by the
Council (in cooperation with the
European Parliament and the
Commission) and one represen-
tative of the Commission.

Duties

To adopt the work programme
and the budget and ensure that
they are implemented

2. Executive Director

Appointed by the Management
Board on the basis of a list of
candidates proposed by the
Commission, following a hear-
ing before the European Parlia-
ment;

3. Advisory Forum

Composition

One representative per Member
State,

Duties

To advise the Executive Director;

4. Scientific Committee and
scientific panels:

To draw up the Authority’s sci-
entific opinions

5. External audit

Court of Auditors

6. Discharge authority Parlia-
ment, on the Council’s recom-
mendation.

Of the 301 requests for scientific opinions made
to the EFSA in 2005 (which represents an
increase of 65 % compared with 2004),
163 opinions were adopted and published. They
covered many areas including aromatic plants,
genetically modified organisms (with the WHO),
bovine spongiform encephalopathy (BSE) or
transmissible spongiform encephalopathy (TSE).
In addition the Authority published its first
annual report on animal diseases and other
important publications on the determination of
risk in the food sector.

The communication of risks and, in general, the
activities of the communication department saw
a 40 % increase in the number of communica-
tions to the public in 2005. Consultations of the
EFSA’s website also doubled in 2005. The coor-
dination of the communication of risks was
stepped up through the advisory forum and
workshops organised.

The networking of the EFSA with interested par-
ties, national authorities and institutional coun-
terparts intensified through the setting-up of a
forum for interested parties. The Advisory Forum
met five times with a view to working as a net-
work with the national authorities on specific
topics such as coordination in the event of a cri-
sis scenario or increasing the use of the extranet
linking the national authorities, the Commission
and the EFSA.

As regards the assessment of the EFSA in 2005,
the final consultants’ report was published on the
EFSA’s website by the Management Board which
submitted its recommendations at the end of
June 2006.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
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C
3
1
2
/
4
5

EUROPEAN FOOD SAFETY AUTHORITY

Table 2

Implementation of the budget for the financial year 2005

Revenue collected

Allocation of expenditure

Final budget appropriations

Expenditure

Appropriations carried over
from the previous financial
year (1)

Appropriations for the financial year and carried
over from the previous financial year

(1 000 euro)

entered

com-
mitted

paid

carried
over

cancelled available

paid

cancelled available

com-
mitted

paid

carried
over

cancelled

16 354 14 571 14 024

546

1 784

389

312

77 16 743 14 960 14 336

546

1 861

6 446

5 591

3 306

2 285

855

1 477

1 307

170

7 923

7 068

4 613

2 285

1 025

Revenue

Revenue entered
in the final budget
for the financial
year

Source of revenue

Community
subsidies

Own revenue

Other revenue

36 857

31 537

Title I
Staff

Title II
Administration

Title III
Operating activities

Total

36 857

31 537

Total 36 857 29 462 23 154

6 308

7 395

5 684

3 622

2 062 42 541 35 146 26 776

6 308

(1)

In the table showing the overall implementation of the budget which it publishes in its own annual report the Authority does not include implementation of non-automatic carry-overs of appropriations.

Revenue and expenditure account for the financial years 2005 and 2004

Balance sheet at 31 December 2005 and 2004

Table 3

Table 4

14 057

9 300

5 824

3 477

4 756

3 818

2 003

1 815 17 875 13 118

7 827

3 477

6 571

9 457

Operating revenue
Community subsidies
Other 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

27 405
0
27 405

13 012
6 436
8 718
28 166
– 761
0
– 7
– 768

20 591
0
20 591

7 564
5 788
6 431
19 783
808
0
– 33
775

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

Assets
Fixed assets
Short-term receivables
Cash accounts

Liabilities
Results accumulated from previous financial years
Economic result of the year
Short-term debts

(1 000 euro)

2005

2004

1 588
299
10 879
12 766

4 452
– 768
9 082
12 766

Total

Total

1 071
5 025
3 201
9 297

3 677
775
4 845
9 297

C
3
1
2
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4
6

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1
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2
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6

.

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Official Journal of the European Union

C 312/47

THE AUTHORITY’S REPLIES

In 2006, EFSA has reinforced its budget monitoring by
7.
organising regular reviews, a mid-year budget execution analysis
and forecasts and will continue to strengthen the planning of its
activities aiming at reaching a full budget execution.

Considering that by amending EFSA 2005 Establishment
8.
Plan, the Budgetary Authority reduced a certain number of posts
which were already occupied in 2004, the Authority had to meet
its legal obligation towards those agents and maintain their posts
in conformity with its Financial Regulation and modify this Plan.

9.
Activity Based Management will be progressively imple-
mented by EFSA as it is an essential tool to perform its activities
efficiently. In its 2007 work program, the Authority will clearly
define its priorities within the framework of its founding Regula-
tion and other applicable EU legislation and will describe the key
initiatives to meet them. Further improvements on performance
indicators and other management tools will also be undertaken in
order to measure the results of its activities.

EFSA has adopted internal control standards in July 2005
10.
and continues its efforts in order to fully implement them. In
addition, the Authority plans to perform a risk analysis for 2007.

11.
As a priority in 2006, the Authority has taken measures
in order to strengthen the controls around recruitment proce-
dures and reinforce their transparency and will continue its efforts
to guarantee observance of the rules in force.

12.
The Authority will ensure that internal control systems of
the procurement procedures are strengthened in order to fully
comply with the rules in force. In 2006, specific trainings on ten-
dering procedures will be organised and better systems imple-
mented to reinforce the controls on such procedures have been
set-up.

13.
The Authority has brought to the attention of the Bud-
getary Authorities and the Commission the cost of EFSA premises
and will keep them informed on the progress of its final seat
project.