Report on the annual accounts of the Executive Agency for Competitiveness and Innovation for the financial year 2007 together with the Agency's replies
Date: 2008-09-25
Institutions: European Court of Auditors
Subjects: EU action, EU office or agency, administration of the Institutions, competitiveness, financial control, implementation of the budget, innovation, powers of the institutions (EU), report

5.12.2008

EN

Official Journal of the European Union

C 311/79

on the annual accounts of the Executive Agency for Competitiveness and
Innovation for the financial year 2007 together with the Agency’s replies

REPORT

(2008/C 311/12)

CONTENTS

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

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

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

1-2

3-6

7-8

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

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

80

80

80

81

85

Paragraph

Page

C 311/80

EN

Official Journal of the European Union

5.12.2008

INTRODUCTION

altered

1.
The Executive Agency for Competitiveness and Innovation
(hereinafter referred to as the Agency) is the former Intelligent
Energy Executive Agency (IEEA). Its mandate and the duration
following Commission Decision
thereof were
2007/372/EC of 31 May 2007 amending (1) Decision
2004/20/EC of 23 December 2003 (2). The Agency was estab-
lished for a limited period beginning on 1 January 2004 and now
ending on 31 December 2015 with the aim of managing Com-
munity actions in the field of energy, entrepreneurship and inno-
vation, and sustainable freight transport.

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

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.

4.
The Agency’s accounts for the financial year ended
31 December 2007 (4) were drawn up by its Director, pursuant
to Article 14 of Council 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 underly-
ing transactions.

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.

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

The Agency’s final budget for 2007 amounted to 6,9 mil-
7.
lion euro as compared with 5,2 million euro allocated to the IEEA
the previous year. Nearly 90 % of the budget, 6,2 million euro,
was committed but 2,1 million euro were carried-over. A signifi-
cant part of these carry-overs concerned goods and services which
will, to a large extent, be delivered in 2008. This situation was at
odds with the principle of annuality. Furthermore the amounts
carried over were over-estimated by 0,3 million euro.

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.

8.
Due to the extension of the Agency’s mandate, the initial
budget was amended twice during the year (6). The Agency pub-
lished the two amending budgets in the Official Journal only on
4 January 2008. The revised figures that were published were not
disclosed separately for each amended budget. This situation was
at odds with the principle of transparency.

This report was adopted by the Court of Auditors in Luxembourg at
24 and 25 September 2008.

its meeting of

For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President

(1) OJ L 140, 1.6.2007, p. 52.
(2) OJ L 5, 9.1.2004, p. 85.
(3) OJ L 11, 16.1.2003, p. 5.
(4) These accounts were drawn up on 18 June 2008 and received by the

Court on 3 July 2008.

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

dards of Supreme Audit Institutions (ISSAI).

(6) The first amending budget was approved by the Steering Committee
on 12 July 2007 and the second on 17 October 2007. The first
amending budget followed a decision to increase the initial budget
from 4,563 million euro to 9,910 million euro. The second amend-
ment made in October aimed to reduce the budget to 6,937 million
euro.

EACI — Executive Agency for Competitiveness and Innovation (Brussels)

Table 1

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Commission Decision 2004/20/EC
amended by Commission Decision 2007/372/EC

Governance

1. The Community policy on
the environment shall contrib-
ute to preserving, protecting
and improving the quality of
the environment; protecting
human health; prudent and
rational utilisation of natural
resources and promoting mea-
sures at international level to
deal with regional or world-
wide environmental problems.

(Article 174 of the Treaty)

2. The Community policy on
industry shall ensure that the
conditions necessary for the
competitiveness of the Com-
munity’s
industry exist by
speeding up the adjustment of
industry to structural changes,
encouraging an environment
favourable to initiative and to
the development of and coop-
eration between undertakings,
fostering better exploitation of
the industrial potential of poli-
innovation, research
cies of
and technological develop-
ment. The Member States shall
consult each other in liaison
with the Commission and,
where necessary, shall coordi-
nate their action. The Commis-
sion may take any useful
initiative
such
coordination.

to promote

(Article 157 of the Treaty)

Objectives

Tasks

Within the framework of the Lis-
bon strategy for growth and jobs,
the European Union has taken
measures to promote and develop
competitiveness and innovation.

These measures include the estab-
lishment of the Competitiveness
and Innovation Framework Pro-
gramme (CIP) 2007-2013 (Deci-
sion No 1639/2006/EC), notably
with the Intelligent Energy —
Europe (IEE) and Entrepreneur-
ship and Innovation (EIP) pro-
grammes. They also include the
Marco Polo programme (Regula-
tion (EC) No 1692/2006).

The main objectives are to foster
competitiveness of enterprises, in
particular SMEs; to promote all
forms of
including
innovation,
eco-innovation; and to promote
energy efficiency and new and
renewable energy sources in all
sectors, including transport.

Community

Under
these Community pro-
grammes, the Agency is respon-
sible for implementing the tasks
concerning
aid,
except for programme evaluation,
monitoring of legislation and stra-
tegic studies, or any other action
which comes under the exclusive
competence of
the European
Commission.

In the context of implementing
the Community programmes for
which the delegation of
tasks
from the Commission to the
Agency was effective in 2007,
since
notably
1 July 2005, IEE II since 26 July
and EIP since 1 November 2007:

IEE

the

I

— To manage all phases in the
lifetime of specific projects.

— To adopt the instruments of
budget implementation and
to carry out, where the Com-
mission has empowered it to
do so, all the operations nec-
essary to manage the Com-
munity programme and, in
particular, those linked to
the awarding of contracts
and grants.

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

— As regards the EIP, also to
be-in charge of project man-
agement of the business and
innovation support network.

1. Steering Commit-
tee

Comprises five members
appointed by the Euro-
pean Commission.
It
adopts
the Agency’s
annual work programme
after approval by the
European Commission.
In addition, it adopts the
administrative budget of
its
the Agency
annual activity report.

and

2. Director

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

Activities and services provided in 2007

Final Budget

For the IEE programme:

(A) 137,3 (53,2) million
euro (100 % general budget
of
the European Union of
which 63,7 million euro for
IEE, and 73,5 million euro for
EIP. The Agency implements
the operational budget under
the responsibility of the Com-
mission).

— Monitored 425 on-going IEE projects
(awarded under the annual Calls for pro-
posals 2003-2006). 318 Reports were pro-
cessed and payments made to beneficiaries
accordingly. The Agency participated in 70
project meetings and organised 6 thematic
project co-ordinator workshops with the
participation of the parent DG and other
related services.

(B) 6,9 (5,2) million euro
(100 % Community subsidy)
for the administrative budget
that the Agency implements
autonomously.

— The Agency selected 99 projects out of 296
proposals submitted under the 2006 call
for proposals — some 2000 organisations
from 30 countries took part.

Appointed by the Euro-
pean Commission.

Staff at 31 December

3. External Audit

Court of Auditors.

35 (16) TA posts listed in the
establishment plan of which
22 (16) were occupied.

4. Discharge author-
ity

Other posts:

Parliament acting on rec-
ommendation
the
Council.

of

Contract staff: 77 (30) posts
planned of which 47 (25)
were occupied.

Total staff at 31.12.2007: 69

Responsible for

Operational tasks: 54 (31)

Administrative tasks: 15 (10)

— The Agency launched and promoted the
2007 call for proposals through the IEE
website, electronic news alerts and a series
of info days (700 participants at the Euro-
pean info Day and 3 000 participants at 45
national Info Days). 439 proposals were
submitted, about 50 % more than for the
previous Call.

— The Agency created and disseminated
information about the programme and its
results through the IEE website (1,4 million
page views and 0,5 million downloads),
regular electronic News Alerts sent
to
6 000 + contacts, new IEE project bro-
chures
Intelligent
Energy News Reviews (143 000 down-
loads) and 5 video reports featuring IEE
project stories (at least 17 million TV view-
ers saw this material).

(60 000 downloads),

.

.

5
1
2
2
0
0
8

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

C
3
1
1
/
8
1

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Commission Decision 2004/20/EC
amended by Commission Decision 2007/372/EC

Governance

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

Activities and services provided in 2007

— The Agency also answered 800+ enquiries

from the public and potential applicants.

— Through workshops and briefings,

fed back results

the
Agency
from IEE-
supported projects to the European Com-
mission, notably on the proposed new
Renewable Energy Framework Directive.
The Agency also supported DG TREN to
guide the implementation of the IEE pro-
gramme and to prepare the priorities for
the 2008 Call. Following an invitation from
DG TREN, the Agency participated in a
task-force charged with preparing a draft
work programme.

Source:

Information submitted by the Agency.

For the EIP and Marco Polo programmes:

Apart from limited tasks related to budget imple-
mentation for the project management of the
Enterprise Europe Network, the Agency did not
acquire the capacity to assume full ‘autonomy’
for the network in 2007. Its main activities were
related to recruitment and the preparation of the
2008 EACI work programme in consultation
with the parent DGs.

C
3
1
1
/
8
2

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

.

.

5
1
2
2
0
0
8

.

.

5
1
2
2
0
0
8

Executive Agency for Competitiveness and Innovation (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 received

Allocation of expenditure

Expenditure

Appropriations under the final budget

(1 000 euro)

Appropriations carried over from the
previous financial year(s)

entered

committed

paid

carried
over

cancelled

available

paid

cancelled

Community subsidies

Other revenue

6 937

p.m.

6 937

6

Title I
Staff

Title II
Administration

3 853

3 501

3 108

199

352

118

1 875

1 451

548

903

423

67

Total

6 937

6 943

Total

Title III (1)
Technical and administrative sup-
port

1 210

6 937

1 208

6 160

206

3 862

1 002

2 104

2

777

797

982

43

21

623

687

75

46

174

295

(1) Expenditure on experts meetings connected with the implementation of the projects.
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.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

C
3
1
1
/
8
3

C 311/84

EN

Official Journal of the European Union

5.12.2008

Executive Agency for Competitiveness and Innovation (Brussels) — Economic outturn account for the financial
year 2007 and 2006

Table 3

Operating revenue

Community subsidies

Other revenues

Operating expenses

Staff expenses

Fixed asset-related expenses

Other administrative expenses

Total (a)

Total (b)

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

Charges from 2005 (d)

Economic result for the year (e = c – d)

(1 000 euro)

2007

2006

5 667

13

5 680

3 157

48

2 496

5 701

– 21

—

– 21

5 057

105

5 162

2 616

38

1 305

3 958

1 204

273

930

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.

Executive Agency for Competitiveness and Innovation (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 payable

Reserves

Result carried forward from the previous year

Economic result for the year

2007

140

39

101

3 426

46

3 380

3 566

127

2 530

2 656

909

930

– 21

909

Total assets

Total liabilities

Net assets

Net Capital

(1 000 euro)

2006

101

13

88

1 604

95

1 509

1 705

48

727

775

930

930

930

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.

5.12.2008

EN

Official Journal of the European Union

C 311/85

THE AGENCY’S REPLIES

Following last year’s recommendation made by the Court, the EACI reviewed all commitments of the
7.
2007 budget and all legal commitments signed in 2007 to examine the amounts to be carried over, for
example, for on-going contracts with evaluators (780 975 euro) and for those relative to IT (363 728 euro).
The average overestimation amounts to only 12 % of the carry over or 4 % of the 2007 budget, a margin that
the EACI considers reasonable to cover for uncertainties.

In 2008, to further reduce the overestimation, additional measures will be taken, such as assessing the situa-
tion of carry overs more frequently during the financial year.

For the extension of EACI’s tasks, the second amending budget for 2007 was adopted only three months
8.
after the first one. EACI considered it most cost effective to combine the publication of the two amending bud-
gets and to publish them together with amending budgets of other agencies (sound financial management
principle).