Report on the annual accounts of the Education, Audiovisual and Culture Executive Agency for the financial year 2007 together with the Agency's replies
Date: 2008-09-18
Institutions: European Court of Auditors
Subjects: EU office or agency, European Court of Auditors, administration of the Institutions, audiovisual communications policy, culture, education, financial control, implementation of the budget, powers of the institutions (EU), report

5.12.2008

EN

Official Journal of the European Union

C 311/71

REPORT

on the annual accounts of the Education, Audiovisual and Culture
Executive Agency for the financial year 2007 together with
the Agency’s replies

(2008/C 311/11)

CONTENTS

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

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

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

1-2

3-6

7-10

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

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

72

72

72

74

78

Paragraph

Page

C 311/72

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Official Journal of the European Union

5.12.2008

INTRODUCTION

1.
The Education, Audiovisual and Culture Executive Agency
(hereinafter referred to as the Agency) was set up by Commission
Decision 2005/56/EC of 14 January 2005 (1). The Agency was
established for a period beginning on 1 January 2005 and ending
on 31 December 2015 (2). The Agency manages programmes
decided by the Commission in the fields of education, audiovi-
sual and culture, including undertaking the detailed implementa-
tion of technical projects.

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.

Table 1 summarises the Agency’s competences and activi-
2.
ties. Key data summarised from the financial statements drawn up
by the Agency for the financial year 2007 are presented in
Tables 2, 3 and 4for information purposes.

OBSERVATIONS

STATEMENT OF ASSURANCE

3.
This Statement is addressed to the European Parliament
and the Council in accordance with Article 14 of Council Regu-
lation (EC) No 58/2003 of 19 December 2002 (3); 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 2007 (4) were drawn up by its Director, pursuant
to Article 14 of Regulation (EC) No 58/2003, 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 underlying
transactions.

5.
The Court conducted its audit in accordance with the IFAC
and ISSAI (5) 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 2007 are, in all material respects, reliable.

(1) OJ L 24, 27.1.2005, p. 35.
(2) OJ L 49, 17.2.2007, p. 21.
(3) OJ L 11, 16.1.2003, p. 1.
(4) These accounts were drawn up on 16 June 2008 and received by the

Court on 8 July 2008.

(5) International Federation of Accountants (IFAC) and International Stan-

dards of Supreme Audit Institutions (ISSAI).

The Agency’s final administrative budget

7.
for 2007
amounted to 36,0 million euro as compared with 27,7 million
euro for the previous year. This increase is mainly explained by
the extension of the Agencys mandate to cover implementation
of the new generation of EU programmes for the period 2007-
2013. Of the budget appropriations, 6,8 million euro have been
carried over to 2008. A significant part of these carry-overs con-
cerned external services contracted in 2007 which will to a large
extent be implemented in 2008 (IT development, experts,
etc.). Thus the budgetary principle of annuality was not strictly
observed.

8.
1,1 million euro of the appropriations carried over from
2006 were cancelled in 2007 mainly due to the overstatement of
expert-related expenditure and delays in the implementation of
audit contracts. A high number of audits (6) contracted before the
end of 2006 were still not closed at the end of 2007. The corre-
sponding appropriations had to be cancelled and the Agency will
need to use 2008 appropriations to pay the costs related to these
in
audits. There is a risk this situation will repeat
2008 (7). The above described situations show that there is still
room for improvement in the programming and the budgeting of
the Agency’s activities.

itself

For one contract (8), the intermediate payment was made
9.
by the Agency for fees despite the fact that all the required sup-
porting documentation was not provided by the contractor.

(6) About 34 contracts for a total value of 139 103,74 euro.
(7) More than 1,1 million euro appropriations pertaining to ‘Audit fees’
(Article 264 of the budget) have been carried over from 2007 to 2008.
(8) Contract for the organisation of the annual Erasmus Mundus Consor-

tia conference (Value of the contract: 283 953,50 euro).

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Official Journal of the European Union

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The Agency has yet to adopt a formal recruitment prac-
10.
tical guidelines for temporary and contractual staff. This would

better ensure transparent and non-discriminatory procedures.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of
18 September 2008.

For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President

Table 1

Education, Audiovisual and Culture Executive Agency (EACEA), Brussels

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Commission Decision 2005/56/EC of
14 January 2005 and in Commission Decision 2007/114/EC of 8 February 2007

Governance

Resources made available to the Agency in 2007
(Data for 2006)

Activities and outputs in 2007
(Products and services supplied in 2007)

The Community shall contribute
to the development of quality
education.

(Article 149(1) of the Treaty)

The Community shall implement
a vocational training policy.

(Article 150(1) of the Treaty)

The Community shall contribute
to the flowering of the cultures
of the Member States.

(Article 151(1) of the Treaty)

The Community and the Mem-
berStates shall ensure that the
conditions necessary for
the
competitiveness of the Commu-
nity’s industry exist.

(Article 157(1) of the Treaty)

Objectives

Tasks

1. Steering Committee

Final 2007 budget

(a) Activities and outputs in 2007

In the framework of the educa-
tion, culture and industry policies,
numerous measures have been
taken to promote
education,
vocational training, audiovisual,
culture, youth and active citizen-
ship in the European Union. The
main objectives of these measures
are to reinforce social cohesion
and to contribute to competitive-
ness, to economic growth and to
an ever closer union amongst the
people of Europe.

These measures include a variety
of Community programmes.

The Agency is responsible for
managing certain strands of these
programmes (e.g. ’Lifelong learn-
ing’, ’Culture’, ’Youth in Action’,
’Europe for Citizens’,
’MEDIA’,
’Erasmus Mundus’ and ’External
Cooperation Windows’). In this
respect, it implements the com-
for pro-
except
munity aid,
gramme
strategic
evaluation,
studies and any other task which
require discretionary powers in
translating political choices.

— To manage, throughout their
duration, the specific projects
entrusted to it in the context
of implementation of Com-
munity programmes.

— To adopt the instruments of
budget
implementation for
revenue and expenditure and
to carry out, where the Com-
mission has empowered it to
do so, the operations neces-
sary for the management of
the Community programmes
and, in particular, those linked
to the award of grants and
contracts.

— To gather, analyse and pass on
to the Commission all
the
information needed to guide
the implementation of
the
Community programmes.

— To implement, at Community
level, the network of informa-
tion on education in Europe
(Eurydice) for the collection,
analysis and dissemination of
information and the produc-
tion of studies and publica-
tions.

Comprises
five members
appointed by the European
Commission.

It adopts the Agency’s annual
after
programme
work
approval by the European
Commission.
it
adopts the administrative bud-
get of
the Agency and its
annual activity report.

In addition,

2. Director

Appointed by the European
Commission.

3. External audit

Court of Auditors.

1. Operational budget

406 (310,2) million euro for the manage-
ment of Community programmes and
projects delegated to the Executive Agency
and implemented by the Agency on the
Commission’s responsibility.

2. Administrative budget:

36 (29,2) million euro for operating the
Executive Agency as an independent body

(99,9 % subsidy entered in the general bud-
get of the European Communities + 0,1 %
from EDF).

Staff at 31 December 2007

1. Temporary staff:

83 (75) posts for temporary staff.

Post occupied: 69 (64)

Ratio AT: 25 %

2. Contractual staff:

4. Discharge authority

252 (221) contractual staff.

The European Parliament fol-
lowing a recommendation of
the Council.

Posts occupied: 232 (214)

Ratio AC: 75 %

3. Total staff: 301 (278)

4.

Jobs allocation:

— Operational: 242 (227)

— Administrative: 57 (49)

— Mixed: 2 (2)

— In accordance with the extension of its man-
date and in compliance with the principle of
sound financial management, the Executive
Agency has achieved the management of cer-
tain strands of the new generation of pro-
grammes
fields of
education, audiovisual and culture, including
studies, national organisms and additional calls
for proposals. The Executive Agency has also
implemented the actions delegated from 2007
in the area of external cooperation in higher
education and training.

(2007-2013)

in the

— In parallel, the Agency has pursued the man-
agement of the ongoing Erasmus Mundus pro-
gramme (2004-2008) and the tasks aiming at
the completion of the previous generation of
programmes expiring end 2006.

— The Executive Agency has enhanced coopera-
tion with its parent DGs-EAC and INFSO-and
combined efforts with its third parent DG Euro-
peAid.

(b) Results achieved in 2007 (indicators)

— 39 calls for proposals have been published for
the new generation of programmes 2007-
2013; the relevant selection processes have
been organised on schedule. More than 4 000
projects were selected for grant award, virtually
all of which resulted in a contract by the end of
2007.

— Regarding the completion of previous pro-
grammes, the analysis of more than 4 100 final
reports has been completed; around 4 700
final payments have been carried out; 3 400
projects closed in 2007.

C
3
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8

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Commission Decision 2005/56/EC of
14 January 2005 and in Commission Decision 2007/114/EC of 8 February 2007

Governance

Resources made available to the Agency in 2007
(Data for 2006)

Activities and outputs in 2007
(Products and services supplied in 2007)

— In addition, 650 final reports under the new
’Europe for citizens’ programme have been
final payments
analysed and the relevant
executed.

.

.

5
1
2
2
0
0
8

— The budget execution rates have reached 99 %
for commitments appropriations and 95 % for
payments appropriations (operational budget).

E
N

— +/- 200 monitoring visits were carried out to

projects in progress.

— 15 calls for tenders/procurement procedures
were launched for the execution of studies and
services; six contractors were selected by end
2007.

— A range of simplification measures has been
implemented to improve management pro-
cesses and procedures towards beneficiaries
and to harmonize and accelerate internal work-
ing procedures.

— The necessary recruitment measures have been
initiated in 2007 to take over the management
of the European Eurydice unit from 2008.

— A methodology has been implemented to
gather, analyze and disseminate projects’
results. Moreover, a range of projects’, kick off
meetings and three InfoDays have taken place
in 2007. By the end of 2007, the Agency web-
site registered around 7 000 page views a day
and 40 000 unique visitors a month.

— 110 audits were closed (60 %) out of the 185
unfinished audits handed over from DG EAC
in 2006.

— Regarding the Agency’s audit plan for year
2006 (99), 98 audit visits have been carried out
and 25 audits are closed. Only six draft reports
are still expected. The Agency drew up an audit
plan in 2007 scheduling 138 on-the-spot audit
visits.

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Source:

Information supplied by the Agency.

Education, Audiovisual and Culture Executive Agency (Brussels) — Implementation of the budget for the financial year 2007

Table 2

Source of revenue

Revenue

Revenue entered in the
final budget for the
financial year

Revenue collected

Allocation of expenditure

Community Subsidies (1)

36 027 (2)

36 136

Title I
Staff

Title II
Administration

Expenditure

Final budget appropriations

(1 000 euro)

Appropriations carried over from the
previous financial year

entered

committed

paid

carried
over

cancelled

available

paid

cancelled

21 008

20 201

19 178

1 023

807

1 220

927

293

Total

36 027

36 136

Total

36 027

34 432

27 615

15 019

14 231

8 437

5 795

6 818

787

1 594

5 468

6 688

4 629

5 556

839

1 132

(1) European Economic Area.
(2)
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.

Including 50 000 euros from the FED.

C
3
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7
6

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5
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2
2
0
0
8

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Official Journal of the European Union

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Education, Audiovisual and Culture Executive Agency (Brussels) — Economic outturn account for the financial
year 2007 and 2006

Table 3

Operating revenue

Community subsidies

Other revenue

Operating expenses

Staff expenses

Fixed asset related expenses

Other administrative expenses

Financial operations expenses

(1 000 euro)

2007

2006

33 191

292

26 397

Total (a)

33 483

26 397

Total (b)

Total (c)

Economic result for the year (d = a – b – c)

15 665

210

17 005

32 880

4

4

599

13 071

57

9 725

22 853

0

0

3 544

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.

Education, Audiovisual and Culture Executive Agency (Brussels) — Balance sheet at 31 December 2007
and 2006

Table 4

Non-current assets

Intangible fixed assets

Tangible fixed assets

Current assets

Short-term receivables

Cash and cash equivalents

Current liabilities

Provisions for risks and charges

Accounts payables

Reserve

Accumulated surplus/deficit

Economic result of the year

(1 000 euro)

2007

2006

222

338

915

9 829

Total assets

11 304

476

6 684

7 160

4 144

3 544

599

4 144

Total liabilities

Net assets

Net capital

159

243

1 252

7 886

9 540

310

5 686

5 996

3 544

—

3 544

3 544

NB: Variations in totals are due to the effects of rounding.
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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Official Journal of the European Union

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THE AGENCY’S REPLIES

The Agency has already reduced the rate for the carryover of appropriations by 4 % compared with
7.
2006. Moreover, the second renewal in 2008 of a number of contracts of employment signed at the end of
2006 after the Agency became self-financing covers a shorter period in order to remedy the situation during
the carryover of appropriations around 2009.

In order to avoid large-scale cancellations of appropriations carried over, the Agency implemented a
8.
closing procedure at the end of 2007 aimed at carrying over to N + 1 only those approprations intended to
cover the payment of invoices not received by 31/12/N. There was also greater monitoring of provisional com-
mitments in 2007. As for audits, the continued gradual reduction of the backlog from 2006 remains a prior-
ity for 2008. Also, the 2008 audit plan has been adapted to allow the backlog to be absorbed and to ensure
speedier implementation of the latter.

9.
Given the particularly short interval between the date of the seminar and the date for submission of the
report, the Agency agreed with the contractor that the interim report would be limited to financial data and to
confirmation of the number of participants. A detailed examination of all the documents is in progress before
final payment is made.

The Practical Guide will be adopted once the consultation procedure with the Staff Committee has

10.
been finalised.