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

C 309/80

EN

Official Journal of the European Union

19.12.2007

REPORT

on the annual accounts of the European Food Safety Authority for the
financial year 2006 together with the Authority’s replies

(2007/C 309/14)

CONTENTS

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

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

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

1-2

3-6

7-11

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

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

81

81

81

83

85

Paragraph

Page

19.12.2007

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Official Journal of the European Union

C 309/81

INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement set out below:

1.
The European Food Safety Authority (hereinafter referred
to as ‘the Authority’) was established by Regulation (EC)
No 178/2002 of the European Parliament and of the Council of
28 January 2002 (1). Its main tasks are to supply the scientific
information 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.

Table 1 summarises the Authority’s competences and
2.
activities. Key data summarised from the financial statements
drawn up by the Authority for the financial year 2006 is pre-
sented in Tables 2, 3 and 4 for information purposes.

Reliability of the accounts

The Authority’s accounts for the financial year ended
31 December 2006 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

The transactions underlying the Authority’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

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 2006 (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 its audit in accordance with the IFAC
ad 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.

OBSERVATIONS

7.
In 2006, payment rates were of 56 % of appropriations for
administrative expenditure (Title II) and of 50 % of those for
operational activities (Title III). 20 % of appropriations carried
over from 2005 were cancelled at the end of 2006. A large num-
ber of transfers were made with a high concentration of them at
the year-end (4). Thus, the budgetary principles of annuality and
specification were not strictly observed.

8.
The Authority did neither make a comprehensive risk
assessment and define appropriate performance indicators, nor
documented the systems and internal control procedures govern-
ing its activities. This situation precluded the implementation of
an effective risk-management policy, which is essential to activity-
based budget management.

Final payments (5) were made in spite of insufficient sup-
9.
porting documentation. Moreover, it was difficult to assess the
adequacy of the checks carried out to verify the correctness and
completeness of the financial
information submitted by the
supplier.

10.
The Authority did neither set realistic recruitment objec-
tives, nor define priorities with regard to vacancies nor fix dead-
lines for each recruitment procedure. Only two-thirds of the 250
posts available under the Authority’s 2006 establishment plan
had been filled by the end of the year.

(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 19 June 2007 and received by the

(4) 31 of the 49 transfers effected by the Authority were made during the

last quarter.

Court on 27 June 2007.

(5) Value of the cases detected: approximately 500 000 euro.

C 309/82

EN

Official Journal of the European Union

19.12.2007

With regard to procurement procedures, the following
11.
irregularities were observed (1): the selection criteria not stated, or
not applied; the price-evaluation method not defined until the
evaluation procedure was under way; too vague description of

the quality criteria. The composition of the evaluation committee
did not comply with the principle of hierarchical independence of
its members. This situation resulted mainly from the fact that the
Authority did not apply clear procurement procedures.

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) Seven cases of an approximate total value of: 670 000 euro.

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)

Governance

Resources made available
to the Authority in 2006
(2005)

Products and services supplied

Table 1

European Food Safety Authority (Parma)

Free movement of goods

Objectives

Tasks

1. Management Board

Final budget

40,2 million euro (36,9
million euro); Community
contribution:
100 %
(100 %)

numbers

Staff
31 December 2006

as

at

Number of posts in estab-
lishment plan: 250 (194)

Posts occupied: 173 (124)

+ 57 (36) other posts (aux-
iliary contracts, seconded
national experts, local staff)

Total staff: 230 (160)

Assigned to the following
duties:

— operational: 150 (104)

— administrative: 80 (56)

(Article 37 of the Treaty)

Contribution to a high level
of protection of health, safety
and protection of the envi-
ronment and of consumers,
taking account of any new
development based on scien-
tific facts

(Article 95 of the Treaty)

Common trade policy

(Article 133 of the Treaty)

Public health

(Article 152(4)(b) of the Treaty)

— To provide

scientific
opinions and scientific
and technical
support
for the Community’s leg-
policies
and
islation
which have a direct or
indirect impact on food
and feed safety

— To provide independent
information on risks
relating to food safety

— To contribute to the
achievement of a high
level of protection of
human life and health

— To collect and analyse
data needed to allow
characterisation
and
monitoring of risks

Source:

Information supplied by the Authority.

— To

issue

scientific

Composition

opinions and studies

— To promote uniform
risk-assessment meth-
odologies

14 members appointed by the Coun-
cil (in cooperation with the European
Parliament and the Commission) and
one representative of the Commission

— To assist the Commis-

Duties

sion

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

— To identify and charac-

terise emerging risks

— To establish a network
of organisations oper-
ating in similar fields

— To provide scientific
assis-
and technical
tance in crisis manage-
ment

— To improve interna-
tional cooperation

— To provide the public
and interested parties
with reliable, objective
and easily comprehen-
sible information

— To take part
Commission’s
alert system

in the
rapid

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, follow-
ing a hearing before the European
Parliament

3. Advisory Forum

Composition

One representative per Member State

Duties

To advise the Executive Director

4. Scientific Committee and sci-
entific panels:

To draw up the Authority’s scientific
opinions

5. External audit

Court of Auditors

6. Discharge authority

Parliament, on the Council’s recom-
mendation

Following the 323 requests for scientific opin-
ions made to the EFSA in 2006, 132 opinions
and four reports were adopted and published.
They covered many areas dealt with by the nine
scientific panels,
including aromatic plants,
genetically modified organisms (with the WHO),
bovine spongiform encephalopathy (BSE) or
transmissible spongiform encephalopathy (TSE).

EFSA’s communication of risks to the public and
its activities in general have been broadly
acknowledged as a result of 4 600 articles cover-
ing the Authority’s scientific work. Consultation
of EFSA’s website also increased, with 1,33 mil-
lion hits, and there were 12 200 subscribers to
EFSA Highlights. The coordination of the com-
munication of risks was stepped up through the
Advisory Forum and the workshops organised.

EFSA’s networking with interested parties,
national authorities and institutional counter-
parts intensified through the activities of, inter
alia, a forum for interested parties and pro-
grammes aimed at the new Member States or
candidate countries. The Advisory Forum met
five times with a view to networking with
national authorities on specific topics, such as
coordination in the event of a crisis scenario and
increasing the use of the extranet linking national
authorities, the Commission and EFSA.

With regard to the assessment of EFSA in 2005,
the Management Board submitted its recommen-
dations in the summer of 2006 and their imple-
mentation has been ongoing since then.

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European Food Safety Authority (Parma) — Implementation of the budget for the financial year 2006

Table 2

Source of revenue

Revenue

Revenue entered in the
final budget for the
financial year

Revenue collected

Allocation of expenditure

Community subsidies

40 249

37 520

Other revenue

0

23

Total

40 249

37 543

Title I
Staff

Title II
Administration

Title III
Operating activities

(1 000 euro)

Expenditure

Final budget appropriations

Appropriations carried over from previous financial
year(s)

entered

committed

paid

carried
over

cancelled

entered

committed

paid

cancelled

18 505

17 722

17 238

483

783

546

546

480

7 375

7 037

4 144

2 894

338

2 285

2 285

2 100

66

185

14 369

11 649

7 137

Total

40 249

36 408

28 519

4 512

7 889

2 720

3 841

3 476

6 308

3 476

6 308

2 464

5 044

1 012

1 264

NB: Variations in totals are due to the effects of rounding.
Source: Data supplied by the Authority. This table summarises the data provided by the Authority in its annual accounts. Revenue collected and payments are estimated on a cash basis.

European Food Safety Authority (Parma) — Economic outturn account for the financial years
2006 and 2005

European Food Safety Authority (Parma) — Balance sheet at 31 December 2006 and 2005

Table 3

Table 4

Operating revenue
Own resources
Community subsidies
Other subsidies
Other revenue

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 revenue (e)
Financial operations expenditure (f)

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

(1 000 euro)

2006

2005

35 117

27 405

23
35 140

16 014
771
8 303
8 950
34 038
1 102
3
4
– 1
1 101

0
27 405

13 012
603
5 833
8 718
28 166
– 761
0
7
– 7
– 768

Non-current assets
Intangible fixed assets
Tangible fixed assets
Current assets
Short-term pre-financing
Short-term receivables
Other receivables
Cash and cash equivalents

Current liabilities
Provision for risks and charges
Accounts payable

Net assets
Accumulated surplus/deficit
Economic result for the year

Total assets

Total liabilities

Total net assets
Total liabilities and net assets

(1 000 euro)

2006

2005

687
950

224
43
112
10 607
12 624

388
7 451
7 839

3 684
1 101
4 785
12 624

615
972

171
100
28
10 879
12 766

0
9 082
9 082

4 452
– 768
3 684
12 766

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

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19.12.2007

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Official Journal of the European Union

C 309/85

THE AUTHORITY’S REPLIES

The payment rate in 2006, mainly under Title Ill reflects
7.
the increased multi-annual nature of the operations. In 2007 the
Authority will improve its budget forecasting and monitoring to
reduce transfers in number nd volume. Increased control on carry
over will be implemented for the 2007 closing of accounts.

In November 2006 a precise recruitment plan 2007 has
10.
been adopted by the Authority’s management in order to enable
the Authority to recruit the number of staff members as foreseen
in its establishment plan.

8.
To increase awareness for internal control within the
Authority, an internal control action plan was implemented.
Moreover internal control self assessment as well as high level
corporate risk assessment are part of the 2007 work plan.

9.
The final payments audited were processed during the first
part of 2006, nevertheless, in order to assess the correctness and
completeness of the financial information submitted by the sup-
plier, the Authority reinforced the financial verification team by
two additional staff members during the first quarter of 2007 and
implemented check-lists during the second quarter of 2007.

11.
Procurement procedures in question are not recent some
were launched as early as 2004, for others contracts were awarded
in 2005 and 2006. The Authority continues to improve compli-
ance with applicable procurement rules, in particular through a
reinforced central support unit, update of guidance documents
and, since 2007, by the recruitment of a new staff member
devoted to the support of tendering procedures. Moreover, the
Authority made an important effort to train its staff in procure-
ment matters (various general and topical training sessions were
organised in 2006 and 2007 — over 100 staff members
participated).