Report on the annual accounts of the European Environment Agency for the financial year 2006 together with the Agency's replies
Date: 2007-09-27
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Environment Agency, administration of the Institutions, financial control, implementation of the budget, powers of the institutions (EU), report

C 309/24

EN

Official Journal of the European Union

19.12.2007

REPORT

on the annual accounts of the European Environment Agency for the
financial year 2006 together with the Agency’s replies

(2007/C 309/05)

CONTENTS

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

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

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

1-2

3-6

7-8

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

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

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Paragraph

Page

19.12.2007

EN

Official Journal of the European Union

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INTRODUCTION

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 par-
ticular, enable the European Union and the Member States to take
action to safeguard the environment and assess the effectiveness
of such action.

2.
Table 1 summarises the Agency’s competences and activi-
ties. Key data summarised from the financial statements drawn up
by the Agency for the financial year 2006 is presented in Tables 2,
3 and 4 for information purposes.

STATEMENT OF ASSURANCE

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.

The Agency’s accounts for the financial year ended
4.
31 December 2006 (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 its audit in accordance with the IFAC
and INTOSAI International Auditing Standards and Codes of Eth-
ics, insofar as these are applicable in the European Community
context. The audit was planned and performed to obtain reason-
able assurance that the accounts are reliable and that the under-
lying transactions are legal and regular.

The Court has thus obtained a reasonable basis for the

6.
Statement set out below:

Reliability of the accounts

The Agency’s accounts for the financial year ended 31 Decem-
ber 2006 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.

OBSERVATIONS

7.
More than 30 % of the commitments for the year had to
be carried forward. This proportion reached more than 50 % for
operational expenditure (Title III and assigned revenue). Some of
the carryovers were not justified: during the last two months of
2006, the Agency made commitments of 1,3 million euro for
which the corresponding payment appropriations were carried
forward to 2007. An audit of a sample (4) of these carryovers
showed that all of them concerned activities to be performed in
2007. Thus, the budgetary principle of annuality was not strictly
applied.

8.
In breach of the principle of segregation of duties, the
same authorising officer by sub delegation not only performed ex
ante checks but also managed access rights to the IT system for
budgetary accounting.

This report was adopted by the Court of Auditors in Luxembourg at
27 September 2007.

its meeting of

For the Court of Auditors
Hubert WEBER
President

(1) OJ L 120, 11.5.1990
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 29 May 2007 and received by the

Court on 3 July 2007.

(4) Value of the sample: approximately 500 000 euro.

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
(2005)

Main products and services supplied
in 2006

Table 1

European Environment Agency (Copenhagen)

Environment policy

Objectives

Tasks

1. Management Board

Final budget

Community policy on the envi-
ronment shall aim at a high level
of protection taking into account
the diversity of situations in the
various regions of the Commu-
nity. It shall be based on the pre-
cautionary principle and on the
principles that preventive action
should be taken, that environmen-
tal damage should as a priority be
rectified at source and that the pol-
luter should pay. (…) In preparing
its policy (…), the Community
shall take account of available sci-
entific and technical data (…).

(Article 174 of the Treaty)

To set up a European environment
information and observation net-
work to provide the Community and
the Member States with objective,
reliable and comparable information
at European level enabling them to:

(a)

(b)

(c)

take the requisite measures to
protect the environment;

assess the results of such mea-
sures;

ensure that the public is prop-
erly informed about the state of
the environment.

Source:

Information supplied by the Agency.

— To provide the Community and the
Member States with the objective
information necessary for framing
and implementing sound and effec-
tive environmental policies;

— to record, collate and assess data on
the state of the environment and to
report on the quality of and pres-
sures on the environment within
the territory of the Community;

— to help ensure that environmental
data at European level are compa-
rable and, if necessary, to encourage
by appropriate means improved
harmonisation of methods of mea-
surement;

— to promote the incorporation of
European environmental data into
international programmes;

— to publish a report on the state of,
trends in and prospects for the envi-
ronment every five years;

— to stimulate the development of
environmental
forecasting tech-
niques, methods of assessing the
cost of damage to the environment
and the exchange of information on
damage-prevention technology;

— to stimulate the development of
methods of assessing the cost of
damage to the environment and the
costs of environmental preventive,
protection and restoration policies.

Consisting of:

37,1 million euro (32,1 million euro)

— one representative per Member

Community subsidy: 75 % (84 %).

State,

— two representatives of the Commis-

sion,

— two scientists appointed by the

European Parliament.

Tasks

To adopt
ensure it is implemented.

the work programme and

Staff numbers at 31 Decem-
ber 2006

Number of posts in the establishment
plan: 115 (115)

Posts occupied: 110 (107)

+ 47 (34) other posts (auxiliary con-
tracts, seconded national experts,
local and employment-agency staff)

2. Executive Director

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

Total staff numbers: 115 (115)

assigned to the following tasks:

— operational: 72 (72)

3. Advisory Forum

— administrative: 42 (42)

Consisting of one representative per
Member State,
it advises the Executive
Director.

— mixed: 1 (1)

4. Scientific Committee

Consisting of qualified figures in the field
of the environment.

5. External audit

European Court of Auditors.

6. Discharge Authority

Parliament on a recommendation by the
Council.

Launch of Prelude (PRospective Envi-
ronmental analysis of Land Use Devel-
opment in Europe).

Update of
Emission Register (EPER).

the European Pollutant

Publication of reports on,
inter alia,
transport and the environment, agri-
culture and the environment, energy
and the environment, bioenergy, air
quality, greenhouse gas emissions, the
state of Europe’s coasts, urban spread
and the management of natural
resources.

Seminars organised under the Presi-
dency of the Council.

Assistance with data harmonisation.

Management of the Eionet (European
Environment Information and Obser-
vation Network).

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European Environment Agency (Copenhagen) — Implementation of the budget for the financial year 2006

Table 2

Origin of revenue

Revenue

Revenue entered in the
final budget for the
financial year

Community subsidies

27 650

Other subsidies

Other revenue

5 264

4 200

Total

37 114

Revenue collected

Allocation of expenditure

Title I
Staff
Title II
Administration
Title III
Operating activities
Earmarked revenue

27 650

5 115

1 798

34 563

(1 000 euro)

Expenditure

Appropriations under the final budget

entered

committed

paid

16 013

16 013

15 692

2 926

2 912

2 623

13 975
4 200
37 114

13 971
781
33 677

8 681
356
27 352

Total

carried
over

308

283

5 290
3 844
9 725

Appropriations carried over from
the previous financial year

cancelled

available

paid

cancelled

13

19

4
—
36

508

895

4 069
2 167
7 639

386

836

3 671
931
5 824

122

59

398
115
694

Source: Data supplied by the Agency — This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis.

European Environment Agency (Copenhagen) — Economic outturn account for the financial
years 2006 and 2005

European Environment Agency (Copenhagen) — Balance sheet at 31 December 2006
and 2005

Table 3

Table 4

Operating revenue
Community subsidies
Other subsidies
Other revenue (1)

Operating expenditure
Staff expenditure
Fixed asset-related expenditure
Other administrative expenditure
Operational expenditure

Total (a)

Total (b)
Surplus/deficit from operating activities (c = a – b)

Financial operations income (e)
Financial operations expenditure (f)

Surplus/(deficit) from non-operating activities (g = e – f)
Economic result for the year (h = c + g)

(1) Recovery of building taxes 2000-2004 (905 000 euro).

(1 000 euro)

2006

2005

27 650
5 673
2 277
35 601

14 500
795
4 843
15 000
35 138
462
72
7
66
528

26 900
5 633
0
32 533

13 423
621
4 700
15 618
34 363
– 1 830
29
7
22
– 1 808

Non-current assets
Intangible fixed assets
Tangible fixed assets
Current assets
Short-term pre-financing (1)
Short-term receivables
Long-term receivables
Cash and cash equivalents (2)

Current liabilities
Accounts payable

Net assets
Accumulated surplus/deficit
Economic result for the year

Total assets

Total liabilities

Total net assets
Total liabilities and net assets

(1) Primarily pre-financing given to European Topic Centres.
(2) Recovery of building taxes 2000-2004 (905 000 euro).

2006

330
1 866

1 151
2 611
494
6 097
12 548

7 779
7 779

4 242
528
4 770
12 548

(1 000 euro)

2005

456
1 649

598
1 581
482
4 491
9 258

5 016
5 016

6 050
– 1 808
4 242
9 258

Source: Data supplied by the Agency — This table summarises the data provided by the Agency in its annual accounts: these accounts are drawn up on an accrual basis.

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C 309/28

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Official Journal of the European Union

19.12.2007

THE AGENCY ’S REPLIES

The higher carry-over rate into 2007 was mainly caused by
extraordinary events in 2006 which required us to delay interim
payments to topic centres until we were satisfied with deliveries.
The late commitments mentioned were due to the obligation to
have license agreements in place before 1 January each year to
maintain continuity and to the time required to define and nego-
tiate costs and time schedules for complex, new work. The
Agency will continue its efforts to reduce the carry-over rate in
this context.

The risks linked to the situation described have been evaluated by
the management and mitigating controls put in place. The
remaining risk level is considered as acceptable. This situation will
be re-evaluated within a review of sensitive posts to be performed
in mid-2007.