Report on the annual accounts of the European Aviation Safety Agency for the financial year 2007 together with the Agency's replies
Date: 2008-09-25
Institutions: European Court of Auditors
Subjects: European Aviation Safety Agency, European Court of Auditors, administration of the Institutions, financial control, implementation of the budget, powers of the institutions (EU), report

C 311/20

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Official Journal of the European Union

5.12.2008

on the annual accounts of the European Aviation Safety Agency for the
financial year 2007 together with the Agency’s replies

REPORT

(2008/C 311/04)

CONTENTS

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

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

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

1-2

3-6

7-10

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

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

21

21

21

23

26

Paragraph

Page

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INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement set out below:

1.
The European Aviation Safety Agency (hereinafter called
‘the Agency’) was established by Regulation (EC) No 1592/2002
of the European Parliament and of the Council of 15 July 2002 (1).
The Agency’s tasks are to maintain a high level of civil aviation
safety, to ensure the proper development of civil aviation safety,
to establish certification specifications and to provide certification
of aeronautical products.

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 2007 are presented in
Tables 2, 3 and 4 for information purposes.

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.

STATEMENT OF ASSURANCE

OBSERVATIONS

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.

7.
The Agency’s 2007 budget amounted to 72 million euro,
as compared with 66 million euro the previous year. The Agen-
cy’s budget is financed by fees and charges levied on certifications
and approvals issued or amended by the Agency and by a contri-
bution from the Commission.

The Agency’s accounts for the financial year ended
4.
31 December 2007 (3) were drawn up by its Executive Director,
pursuant to Article 49 of Regulation (EC) No 1592/2002, and
sent to the Court, which is required to give a statement of assur-
ance 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 (4) International Auditing Standards and Codes of Eth-
ics, in so far 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.

(1) OJ L 240, 7.9.2002, p. 1.
(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 30 June 2008 and received by the

Court on 2 July 2008.

8.
The 2007 establishment plan consisted of 467 temporary
posts, which was an increase of 139 posts compared with the
2006 plan. As the appropriations for staff expenditure did not
cover actual staff costs, the Agency reduced its recruitments and
agreed with the Commission to reduce the number of posts to a
maximum of 342, of which 333 were filled at the year end. How-
ever, the establishment plan was not amended accordingly. The
Agency should carefully check the consistency of the expenditure
forecasts that are to be presented for adoption by the budgetary
authority.

9.
According to the new fees and charges regulation (5) appli-
cable from 1 June 2007, the Agency considered 14,9 million euro
as assigned revenue to cover future certification costs. This
amount, however, is overestimated as it also includes fees levied
under the rules of the former regulation.

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

(5) Commission Regulation (EC) No 593/2007 of 31 May 2007 (OJ L 140,

dards of Supreme Audit Institutions (ISSAI).

1.6.2007, p. 3).

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Official Journal of the European Union

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In one procurement procedure, the absence of clear and
10.
complete information on the award criteria and their respective
weightings, on the one hand, and the financial evaluation method,
on the other hand, led to a situation of non-transparency for the

bidders. In three other cases (1) the restricted procedure after a call
for expressions of interest was applied although the overall value
of the services to be awarded exceeded the threshold requiring an
open procedure.

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) Approximate total value: 2,5 million euro over four years.

Areas of Community competence
deriving from the Treaty

The Agency’s powers as defined in Regulation (EC) No 1592/2002 of the
Parliament and of the Council

Governance

Table 1

European Aviation Safety Agency (Cologne)

Common transport policy:

Objectives

The Council may, acting by a
qualified majority,
decide
whether, to what extent and
by what procedure appropri-
ate provisions may be laid
down for sea and air transport.

To maintain a high uniform
level of civil aviation safety
in Europe and to ensure the
proper
and
development of civil aviation
safety.

functioning

(Article 80 of the Treaty)

Measures to be adopted by the
Agency

— To issue opinions to the Com-

mission.

— To issue certification specifica-
tions, including airworthiness
codes and acceptable means of
compliance, and any guidance
material for the application of
Community policy.

— To take decisions regarding
airworthiness and environ-
mental certification.

— To conduct

standardisation
inspections of the competent
authorities
in the Member
States.

— To conduct

the necessary
investigations on company
premises.

Source:

Information supplied by the Agency.

1. The Management Board
consisting of one representa-
tive of each MemberState and
one representative of the Com-
mission, sets up an advisory
body of interested parties.

2. The Executive Director
manages the Agency and is
appointed by the Management
Board on a proposal from the
Commission.

3. The Board of Appeal
rules on the Agency’s decisions
concerning certification, fees,
charges and checks at under-
takings.

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

Final budget

Opinions

Products and services

Total budget: 72 (66,8) million euro,
including:

5 opinions concerning amendments to Regulations (EC)
No 1592/2002, (EC) No 1702/2003 and (EC) No 2042/2003.

Revenue from fees and charges:

Rulemaking decisions

55,8 (33,2) million euro (65 %)

Community subsidy: 26,5 (31,4) million
euro (31 %)

Contribution from the Federal Republic
of Germany (Ministry of Transport) and
City of Cologne: 0,3 (1,2) million euro.

17 amendments of certification: Specifications (15) and
Acceptable Means of Compliance and Guidance Material (2).

International cooperation

— 7 Working Arrangements with China (5), New Zealand

(1) and Albania (1).

— Amendments to Working Arrangements with Interstate

Staff at 31 December 2007

Aviation Committee (USA) and JCAB (Japan).

467 (328) temporary staff in the estab-
lishment plan

— Memorandum of Understanding with COCESNA/ACSA.

Certification decisions at 31 December 2007

4. External control

posts occupied: 333 (276)

Court of Auditors.

5. Discharge authority

Parliament acting on a recom-
mendation of the Council.

other staff: 29 (33) seconded national
experts, contract and auxiliary staff

Total staff

362 (309) assigned to the following tasks:

Type certificates: 29

Supplementary type certificates: 879

Airworthiness directives: 380

European technical specifications: 198

Acceptable means of compliance: 87

— operational: 277 (227)

— administrative: 57 (57)

— mixed: 28 (25)

Major changes: 1 193

Minor changes: 2 655

Major repairs: 245

Minor repairs: 156

Aircraft flight manual (AFM): 430

Approval of flight conditions (PTF): 508

Approval of design organisations: 429

Approval of maintenance organisations (bilateral): 1 380

Approval of maintenance organisations (foreign): 224

Approval of maintenance training organisations: 24

Approval of manufacturing organisations: 16

Standardisation inspections (number of countries by
type) at 31 December 2007

In the field of maintenance (MAST): 28

In the field of production (POAST): 12

.

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European Aviation Safety Agency (Cologne) — Implementation of the budget for the financial year 2007

Table 2

Source of revenue

Own revenue

Community subsidies

Other subsidies and rev-
enue

Assigned revenue from
fees and charges

Other assigned revenue

Revenue

Revenue entered in the
final budget for the
financial year

42 800

26 530

1 879

p.m.

836

Total

72 045

Revenue collected

Allocation of expenditure

Title I
Staff

Title II
Administration

Title III
Operating activities

40 967

26 530

2 593

14 865

326

85 281

N.B.: Any discrepancies in totals are due to the effects of rounding.
Source:

Information supplied by the Agency. These tables summarise the data supplied by the Agency in its financial statements.

Expenditure

Final budget appropriations

(1 000 euro)

Appropriation carried forward from
the previous financial year

entered

committed

paid

carried
over

cancelled

available

paid

cancelled

33 624

33 086

32 152

934

538

286

243

9 819

9 564

7 968

1 596

255

2 585

2 504

43

81

27 766

27 155

9 956

17 199

611

16 381

14 238

2 143

Assigned revenue from fees and
charges

p.m.

14 865

0

14 865

Other assigned revenue

836

326

326

500

0

10

0

0

0

0

0

0

Total

72 045

84 996

50 402

35 094

1 414

19 252

16 985

2 267

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European Aviation Safety Agency (Cologne) — Economic outturn account for the financial years 2007
and 2006

Table 3

(1 000 euro)

2007

2006

Operating revenue

Fees and charges

Community subsidies

Other subsidies

Other revenue

Operating expenditure

Staff expenditure

Fixed asset related expenditure

Other administrative expenditure

Operational expenditure

44 167

24 166

1 608

559

Total (a)

70 500

31 070

1 392

10 008

22 360

64 830

5 670

605

17

588

35 173

26 401

2 021

340

63 935

23 778

573

6 436

27 798

58 586

5 349

263

19

244

5 593

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

Total (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)

6 258

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 a accrual basis.

European Aviation Safety Agency (Cologne) — Balance sheet at 31 December 2007 and 2006

Table 4

(1 000 euro)

2007

2006

Non-current assets

Intangible assets

Tangible fixed assets

Current assets

Short-term prefinancing

Stocks

Short-term receivables

Cash and cash equivalents

Current liabilities

Provision for risks and charges

Accounts payable

Reserves

Accumulated surplus/deficit

Economic result for the year

274

1 542

0

0

21 820

36 659

60 295

797

44 618

45 415

14 880

8 622

6 258

Total assets

Total liabilities

Net assets

Net capital

14 880

268

1 719

0

0

13 881

24 056

39 924

639

30 663

31 302

8 622

3 029

5 593

8 622

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 a accrual basis.

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THE AGENCY’S REPLIES

During the two first years of the implementation of the fees and charges regulations, the revenue of the
8.
Agency was insufficient to cover its forecasted overall costs. For the sake of prudence, the Agency decided to
slow down recruitment. This was reflected in the Staff Policy Plan 2008-2010 which has been agreed with the
Commission.

The year 2007 was a transition phase for which both old and new fees and charges regulations were
9.
applied. The calculation of the assigned revenue from fees and charges complies with Article 64(5) of the basic
Regulation (EC) No 216/2008 that stipulates that fees collected in 2007 shall be assigned revenues. Indeed,
the basic Regulation does not foresee that fees collected under the former regulation have to be excluded. The
detail of the calculations was presented to the Budget Committee of the Management Board (28 May 2008).

10.
The Agency is fully aware of the necessity to comply strictly with the procurement rules of the Com-
mission. It will pay particular attention to clearly informing the potential bidders on the award criteria and their
evaluation.