Report by the external auditor on the Court of Auditors' accounts for the financial year 2009
Date: 2010-06-29
Institutions: European Court of Auditors
Subjects: European Court of Auditors, auditing, budgetary control, financial year, report, self-employed person








C_2010279EN.01000101.xml










15.10.2010   


EN


Official Journal of the European Union


C 279/1





REPORT BY THE EXTERNAL AUDITOR ON THE COURT OF AUDITORS' ACCOUNTS FOR THE FINANCIAL YEAR 2009
(2010/C 279/01)
NOTE TO READERS
Without prejudice to the provisions of Article 287 of the Treaty on the Functioning of the European Union, which gives the Court of Auditors responsibility for auditing all of the Union's revenue and expenditure, and the provisions of Article 319 of the said Treaty on the granting of the discharge, the Court of Auditors has had its revenue and expenditure accounts audited by an external auditor every year since the close of the financial year 1987.
The reports which the external auditor of the Court of Auditors drew up in respect of the Court's accounts for the financial years 1987 to 1991 were sent only to the Chairman of the European Parliament's Budgetary Control Committee.
Pursuant to a decision taken by the Members of the Court of Auditors at the Court meeting of 8 July 1993, the external auditor's reports have since been published in the Official Journal of the European Union, starting with the report on the financial year 1992.



For the Court of Auditors

Eduardo RUIZ GARCÍA

Secretary-General of the European Court of Auditors





FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
CONTENTS
ANNUAL ACCOUNTS

Independent Auditor's report


Balance sheet as of 31 December 2009


Economic outturn account for the year ended 31 December 2009


Cash flow statement for the year ended 31 December 2009


Statement of changes in equity for the year ended 31 December 2009


Accounting policies and notes to the financial statements







1.


General










2.


Significant accounting policies and presentation of the financial statements










3.


Notes to the balance sheet










4.


Notes to the economic outturn account










5.


Off balance sheet





Budget information financial year 2009


Independent assurance report


Independent Auditor’s report
To the Management of the European Court of Auditors
We have audited the accompanying financial statements of the European Court of Auditors, which comprise the balance sheet as at 31 December 2009, the economic outturn account, the statement of changes in equity and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes, and which starts on page 4 and ends on page 14.
Management’s responsibility for the financial statements
The Management of the European Court of Auditors are responsible for the preparation and fair presentation of these financial statements in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation, and the European Court of Auditors’ Accounting Rules. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the ‘Commission de surveillance du secteur financier’. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management of the European Court of Auditors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements give a true and fair view of the financial position of the European Court of Auditors as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation and the European Court of Auditors’ Accounting Rules.

Luxembourg, 29 June 2010.


PricewaterhouseCoopers SARL


Represented by

Marianne WEYDERT




 
Balance sheet as of 31 December 2009
The accompanying notes on pages 8 to 15 form an integral part of these financial statements.








(EUR)




Assets


Note


31 December 2009


31 December 2008




Intangible fixed assets


3.1.


401 216


417 792




Tangible fixed assets


3.2.


36 554 342


35 080 585




Long-term receivables


 


525


525





Total non-current assets



 



36 956 083




35 498 902





Short-term receivables


3.3.


965 208


1 455 781




Cash and cash equivalents


3.4.


1 527 466


1 488 625





Total current assets



 



2 492 674




2 944 406






Total assets



 



39 448 757




38 443 308
















(EUR)




Liabilities


Note


31 December 2009


31 December 2008





Capital



 



–24 068 815




–22 012 092





Accumulated deficit


 


–22 012 092


–13 098 711




Economic result of the year — profit+/loss-


 


–2 056 723


–8 913 381




Employee benefits


3.5.


56 663 864


52 533 398




Other long-term liabilities


3.6.


175 000


175 000





Total non-current liabilities



 



56 838 864




52 708 398





Provisions for risks and charges


3.7.


650 000


—




Accounts payable


3.8.


6 028 708


7 747 002





Total current liabilities



 



6 678 708




7 747 002






Total liabilities



 



39 448 757




38 443 308





Economic outturn account for the year ended 31 December 2009








(EUR)




 


Note


2009


2008




Funds transferred from the Commission to other institutions


4.1.


104 484 524


97 366 264




Revenues from administrative operations


4.2.


18 622 118


17 487 342




Other operating revenue


4.3.


164 861


143 541





Total operating revenue



 



123 271 503




114 997 147





Staff expenses


4.4.


–92 264 980


–88 155 879 (1)





Fixed assets related expenses


3.1. - 3.2. & 4.5.


–3 393 154


–3 307 315




Other administrative expenses


4.6.


–22 890 737


–19 074 703




Operational expenses


 


– 102 110


–74 871





Total operating expenses



 



– 118 650 981




– 110 612 768






Surplus/(deficit) from operating activities



 



4 620 522




4 384 379





Financial revenues


4.7.


59 266


193 432




Financial expenses


4.8.


–15 125


–15 067




Movement in pensions (– expense, + revenue)


3.5. & 4.9.


–6 721 386


–13 476 125 (1)






Surplus/(deficit) from non-operating activities



 



–6 677 245




–13 297 760






Economic result of the year



 



–2 056 723




–8 913 381





The accompanying notes on pages 8 to 15 form an integral part of these financial statements.







Cash flow statement for the year ended 31 December 2009







(EUR)




 


2009


2008





Economic result of the year




–2 056 723




–8 913 381






Operating activities - Adjustments





Amortisation (intangible fixed assets)


184 798


131 022




Depreciation (tangible fixed assets)


3 206 079


2 073 498




Increase/(decrease) in provisions for risks and charges


650 000


—




Increase/(decrease) in value reduction for doubtful debt


–1 790


1 790




(Increase)/decrease in long-term receivables


—


25




(Increase)/decrease in short-term receivables


492 568


219 123




(Increase)/decrease in receivables EU entities


– 205


3 078




Increase/(decrease) in other long-term liabilities


—


—




Increase/(decrease) in accounts payable


–1 629 818


– 545 311




Increase/(decrease) in liabilities related to EU entities


–88 476


49 834






Net cash flow from operating activities





756 433




–6 980 322






Cash flows from investing activities





Purchase of tangible and intangible fixed assets (–)


–4 850 333


–5 439 210




Proceeds from tangible and intangible fixed assets (+)


—


1 228 068




(Gains)/losses on sale of property, plant and equipment


2 275


1 360






Net cash flow from investing activities





–4 848 058




–4 209 782







Increase/(decrease) in employee benefits





4 130 466




10 665 938





Net increase/(decrease) in cash and cash equivalents


38 841


– 524 166






Cash and cash equivalents at the beginning of the period





1 488 625




2 012 791







Cash and cash equivalents at the end of the period





1 527 466




1 488 625





The accompanying notes on pages 8 to 15 form an integral part of these financial statements.







Statement of changes in equity for the year ended 31 December 2009








(EUR)




Capital


Accumulated deficit


Economic result of the year


Capital (total)





Balance as of 31 December 2008




–13 098 711




–8 913 381




–22 012 092





Allocation of the economic result of previous year


–8 913 381


8 913 381


—




Economic result of the year


 


–2 056 723


–2 056 723





Balance as of 31 December 2009




–22 012 092




–2 056 723




–24 068 815





The accompanying notes on pages 8 to 15 form an integral part of these financial statements.






(1)  Restatement of last year figures in accordance with EC accounting rule 14:

as explained in the Note 4.9 to the Economic outturn account, a net amount of 712 650 EUR is reclassified for 2008 from ‘Staff Expenses’ to ‘Movement in Pension’ to ensure proper comparative information between the year ended 31 December 2008 and the year ended 31 December 2009. This reclassification does not impact the final economic result of the year nor the balance-sheet.
The accompanying notes on pages 8 to 15 form an integral part of these financial statements.


Accounting policies and notes to the financial statements
1.   General
The European Court of Auditors (hereafter the ‘Court’) was established by the Treaty of Brussels of 22 July 1975 and started operating as an external Union audit body in October 1977, with its headquarters in Luxembourg.
Mission of the European Court of Auditors
The Court is the EU Institution established by the Treaty to carry out the audit of EU finances. As the EU external auditor it contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the European Union.
The Court renders audit services through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. The Court communicates the results of its audits in clear, relevant and objective reports. It also provides its opinion on financial management issues.
The Court promotes accountability and transparency and assists the European Parliament and Council in overseeing the implementation of the EU budget, particularly during the discharge procedure. The Court is committed to being an efficient organisation at the forefront of developments in public audit and administration.
The financial year of the Court runs from 1 January to 31 December.
2.   Significant accounting policies and presentation of the financial statements
2.1.   Basis of presentation
The accounts of the Court are drawn up in accordance with the provisions of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities and with the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said financial Council Regulation.
The financial statements are prepared in accordance with the Accounting Rules of the European Union (EC Accounting Rules), which have been inspired by International Public Sector Accounting Standard (IPSAS). These Accounting Rules are adopted by the Accounting Officer of the Commission after a consultation of the other institutions.
2.2.   Valuation of foreign currency balances and transactions
Foreign currency transactions are translated into EUR using the exchange rate prevailing at the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the economic outturn account.
Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December.
2.3.   Intangible and tangible fixed assets
The intangible and tangible fixed assets are stated at historical cost less amortisation/depreciation and impairment. Low value items below EUR 420 are accounted as expenses during the year of acquisition. Assets delivered during the accounting year but not paid at year-end are reported as ‘under construction’; assets under construction also include major building projects still in process at year-end.
Depreciation/amortisation is calculated by the straight-line method, starting the month of acquisition and charged over their estimated useful lives, as follows:






Intangible (Licences for computer software)


4 years




Buildings


25 years or expected useful life




Plant, machinery and tools


4, 8 years




Furniture and vehicle fleet


4, 8, 10 years




Computer hardware


4 years




Fittings specific to leased buildings


the duration of the lease




Other fixtures and fittings


4, 6, 8 years




2.4.   Employee benefits
Employee benefits represent the future pension rights of the Members of the Court in accordance with Article 19 of Council Regulation (EEC, Euratom, ECSC) No 2290/77 of 18 October 1977 determining the emoluments of the Members of the Court of Auditors (OJ L 268 of 20.10.1977, p. 1), the benefits provided for in this pension scheme are entered in the budget of the Union and the Member States jointly guarantee their payment.
The liability for these future pension payments is accounted and disclosed in accordance with EC Accounting Rule 12 ‘Employee Benefits’. The methodology to calculate the liability takes account of characteristics of the pension scheme as defined in accounting rule IPSAS 25.
IPSAS 25 requires that the cost of post-employment benefits be assessed in the present (i.e. when the Member acquires his pension rights). The actuarial commitment is determined on an ongoing basis, taking into account both the promised benefits during the active lifetime and foreseeable increase in salaries. The actuarial valuation method used to calculate the liability is ‘the projected unit credit method’.
The liability is reduced by the estimated amount of taxes that will be applied to future pension payments since these taxes revert to the EU budget as revenue.
The pension liability is recomputed every year at reporting date. In the economic outturn account, the pension expense for the year consists of the pensions paid during the year and of the adjustment of the pension liability at year-end, both net of taxes. Actuarial gains and losses are recognised in the economic outturn account.
Regarding potential ‘Plan assets’, the European Union does not currently have any assets devoted to financing pension commitments.
2.5.   Provisions for risks and charges
Provisions for risks and charges are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.
2.6.   Recognition of expenses
Transactions and events are recognised in the financial statements in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on the amount of the goods delivered or services rendered.
Conversely, some payments made in current year relate to subsequent periods and are identified as deferred charges to be included in the subsequent period(s).
The calculation of accrued and deferred expenses at year end is referred to as the cut-off exercise for which a detailed methodology and practical guidelines have been put in place.
3.   Notes to the balance sheet
3.1.   Intangible fixed assets
The movements in intangible fixed assets during the year 2009 were:











(EUR)




 


Gross book value 1 January 2009


Additions


Disposals



Gross book value 31 December 2009



Accumulated amortisation 31 December 2009



Net book value 31 December 2009





Computer Software


629 882


168 220


—



798 102



– 396 886



401 216






Total




629 882




168 220




—




798 102




– 396 886




401 216





3.2.   Tangible fixed assets
The movements in tangible fixed assets during the year 2009 were:











(EUR)




 


Gross book value 1 January 2009


Additions


Disposals and reclassifications



Gross book value 31 December 2009



Accumulated depreciation 31 December 2009



Net book value 31 December 2009





Land


776 630


—


—



776 630



—



776 630





Buildings


52 074 987


7 515


1 392 129



53 474 631



–26 319 838



27 154 793





Plant and equipments


131 603


68 128


–3 402



196 329



– 116 064



80 265





Computer hardware


4 187 142


507 846


—



4 694 988



–3 603 516



1 091 472





Furniture and vehicle


2 042 600


198 610


– 158 011



2 083 199



–1 306 282



776 917





Other fixtures and fittings


1 899 367


82 907


–1 758



1 980 516



–1 808 983



171 533





Assets under construction


4 077 754


3 817 107


–1 392 129



6 502 732



—



6 502 732






Total




65 190 083




4 682 113




– 163 171




69 709 025




–33 154 683




36 554 342





‘Assets under construction’ are assets partially delivered or delivered but not yet invoiced at year end; this includes major building projects still in process at year-end. When the delivery is accepted and the invoice is received, the related assets are reclassified to the correct heading.
Assets under construction amount to EUR 6 502 732 as at 31 December 2009, and correspond to studies for the building K3 (EUR 2 077 656) and to health and safety works for the building K1 (EUR 4 425 076).
This year, the amount of EUR 1 392 129 for the renovation and upgrade of the conference room in the building K1 was transferred to the heading ‘Buildings’.
3.3.   Short-term receivables







(EUR)




 


31 December 2009


31 December 2008




Current receivables mainly due to the transfer of national pension rights by staff


398 142


504 166




Sundry receivables mainly related to payroll and mission advances


367 360


335 446




Deferred charges for building rentals and IT contracts


197 446


614 114




Receivable from EU entities (Publications Office)


2 260


2 055





Total




965 208




1 455 781





3.4.   Cash and cash equivalents







(EUR)




 


31 December 2009


31 December 2008




Petty cash


1 000


1 000




Bank current account


1 526 466


1 487 625





Total




1 527 466




1 488 625





3.5.   Employee benefits
The liability for future pension payments obligations is net of the taxes which will be recovered on the future pension payments (see also 2.4).







(EUR)




 


31 December 2009


31 December 2008




Gross amount


68 741 798


63 730 921




Tax rate (%)


17,57


17,57




Taxes


12 077 934


11 197 523





Amount net of taxes




56 663 864




52 533 398






Variation of net pension liability




4 130 466




10 665 938





The pension plan devoted to the members is a defined benefit plan. The defined benefits in this context are:






—


transitional allowance (paid at the end of the mandate for three years),










—


retirement pension,










—


invalidity pension and allowance,










—


survivor's pension (paid after the death of the Member whether this happens during or before retirement),




The categories of beneficiaries, for which the liability needs to be calculated, are:






—


the active members,










—


the non-active members with a transitional allowance,










—


the non-active members after the transition period (deferred pension),










—


the retired members,










—


permanently disabled,










—


temporarily disabled,










—


the surviving spouses,










—


the orphans.




The computation of the liability is performed by Eurostat assisted by a qualified independent expert with regard to the implementation of the methodology and to the definition of the corresponding actuarial assumptions.
The assessment of the pension liability requires the handling of variables related to economic and demographic aspects. Values that are affected to these variables can be based on information collection, estimated, or even fixed arbitrarily.
Amongst the main actuarial assumptions were the estimated nominal discount rate, 4,1 % in December 2009, the expected long-term inflation, 2,3 % in December 2009 and the general salary growth, 0 % in December 2009. The values affected in December 2008 for the same variables were respectively 3,7 %, 1,5 % and 0,3 %.
The variation of the gross pension liability during 2009 is not attributable to a change in methodology or any other unusual factor, the evolution can be explained as follows:







(EUR)





Gross Pension liability at 31.12.2008



 



63 730 921






Liability change due to newcomers



 



0






Liability change linked to the characteristics of the constant population



 



3 958 178





Service cost of the ‘constant’ population


5 614 685


 




Interest cost of the ‘constant’ population


2 510 704


 




Pension paid during the year


–2 977 454


 




Actuarial gains and losses from experience


–1 189 757


 





Actuarial gains and losses from changes on assumptions



 



1 052 699





Interest rate


3 295 980


 




Life table


0


 




General Salary Growth


–2 243 281


 




Other changes on actuarial assumptions


0


 





Actuarial gains and losses from changes on methodology and other changes



 



0






Gross Pension liability at 31.12.2009



 



68 741 798





‘Service cost’ reflects the actual value of the additional pension rights, acquired by active members and related to the service during the year.
‘Interest cost’ is due to the age increase of non-retired members; members are older and the duration between the new valuation date and the date at which they will receive their future benefits is reduced by one year.
‘Pension paid during the year’ relates to the payments during the year and is detailed in section 4.9.
‘Actuarial gains and losses’ arise from differences between what was expected from the assumption for the following year and what really occurred during the year.
3.6.   Other long-term liabilities
The amount of EUR 175 000 is contractually due at the termination of the rental of the building K9.
3.7.   Provision for risks and charges
The Commission has introduced an appeal in the Court of Justice further to the adaptation of the EU staff remunerations decided by the Council in December 2009 (1,85 %), lower than the adaptation proposed by the Commission (3,7 %).
The amount of EUR 650 000 is an estimate, net of taxes, of the disputed amount for the Court of Auditors staff and corresponds to an increase of 1,85 % from 1 July 2009 to 31 December 2009.
3.8.   Accounts payable







(EUR)




 


31 December 2009


31 December 2008




Current payables


548 543


540 605




Sundry payables related to payroll and staff


425 994


427 175




Accrued charges — non-EU institutions


4 161 463


5 918 135




Accrued charges — EU institutions


874 060


753 963




Accounts payable against consolidated EU entities mainly to the European Council and Parliament


18 648


107 124





Total




6 028 708




7 747 002





‘Accrued charges – non-EU institutions’ include the value of untaken holidays at year end, which decreases from EUR 1 936 117 for 2008 to EUR 1 799 770 for 2009.
4.   Notes to the economic outturn account
4.1.   ‘Funds transferred from the Commission to other institutions’: the amount corresponds to the monthly calls for funds made by the Court to the Commission to replenish its bank account.
4.2.   ‘Revenues from administrative operations’: for the most part, this heading is made up of deductions from the salaries of members and staff in respect of tax and social contributions.
4.3.   ‘Other operating revenue’ arises among others from the sales of publications by the Publications Office.
4.4.   ‘Staff expenses’ include the salaries of members, statutory staff, contractual agents and temporary staff. The transitional allowances for previous members and the taxes related to the members' pensions and transitional allowances are now part of the item ‘Movement in pension’ (see 4.9)
4.5.   The ‘fixed assets related expenses’ consist of the depreciation/amortisation of the tangible and intangible assets.
4.6.   The most significant items of the ‘other administrative expenses’:






—


buildings' rental and associated charges,










—


IT and telecommunications,










—


missions expenses,










—


cleaning and security services.




4.7.   ‘Financial revenues’ consists of bank interest earned on the Court's current account.
4.8.   ‘Financial expenses’ are bank charges levied on the Court's current account.
4.9.   The item ‘Movement in pensions’ includes all expenses linked to the pensions of the Members of the Court. This covers the pensions and transitional allowances paid during the year as well as the adjustment at year end of the liability for all future pension payments.
Since the pension liability now includes the expenses of transitional allowances, the transitional allowances paid during the year should also be part of the item ‘Movement in Pensions’. This was not disclosed as such in the financial statements 2008 in which the transitional allowances (1 095 429 EUR) and the taxes deducted from payments (– 382 779 EUR) were reported as ‘Staff expenses’.
In accordance with EC accounting rule 14 and as detailed in the table below, the two amounts need to be reclassified to restate 2008 figures and ensure proper comparative information between 2008 and 2009. This reclassification does not impact the final economic result of the year nor the balance-sheet.








(EUR)




 


2009


2008 Restated


2008 Financial Statements





Variation of members' net pension liability




4 130 466




10 665 938




10 665 938





Life pension paid


2 020 586


1 750 629


1 750 629




Survivor pensions paid


356 249


346 908


346 908




Transitional allowances paid


542 642


1 095 429


—




Invalidity pensions paid


57 977


—


—





Sub-total Pension paid during the year




2 977 454




3 192 966




2 097 537






Taxes deducted from payments




– 386 534




– 382 779




—






Total Movement in pension




6 721 386




13 476 125




12 763 475





5.   Off balance sheet
5.1.   Contingent assets
The following bank guarantees have been given by suppliers following contractual obligations:






(EUR)




 


31 December 2009




Travel agency


100 000




Renovation building K1


545 951




Project management building K3


578 000




Car pool leasing


75 000




Insurance company


1 361




Telecommunication


20 000





Total




1 320 312





5.2.   Commitments for future funding






(EUR)




 


31 December 2009




Operational lease for Buildings


11 683 829




Operational lease for IT material, cars and other equipments


1 001 910





Subtotal




12 685 739





Commitments against appropriations not yet consumed — (‘Restant à liquider’) —, after deduction of accruals for 2010


56 918 665





Total




69 604 404





The RAL is an element of budgetary accounting representing the value of outstanding commitments. This is the difference between commitments entered into and payments, which is due to the time-lag between entering into a commitment and proceeding to the related payment.
The increase of the RAL compared to last year is due to the construction of the new building K3.
5.3.   The Court's buildings projects
The Court occupied its headquarters building (the ‘K1’ building) in 1988 and purchased it and the land it stands on outright in 1990. In 1999, the Court signed a framework agreement with the Luxembourg State through which it was given the right to use a second parcel of land for 49 years (renewable once) for the construction of an extension (the ‘K2’ building) in return for a payment of one euro. However for the second extension, the ‘K3’ building, due to different arrangements for carrying out the project it was necessary that the Luxembourg State and the Court concluded a new framework agreement on 22 February 2008.
As regards the two pieces of land relative to the two extensions (‘K2’ and ‘K3’) mentioned above, the State has sold these to the Court for a symbolic one euro. For its part should the Court ever consider ceding one or other of the buildings to a third party other than the Community body or institution, the Court will return the land to the ownership of the State in return for a symbolic one euro, the latter disposing also of an option to buy the building at a price to be determined by an independent expert. In case the State decides not to exercise this option, it would provide a right to use the land to the purchasers of the building.
In Luxembourg, the use of office buildings is authorised for a period of 15 years, after which they must be modernised to bring them into conformity with the prevailing health, safety and environmental standards. These required health and safety works were performed on the K1 building over the last 2 years. Although the works can be considered as globally finalised, the formal final acceptance will be confirmed in 2010. The K2 building entered into service in November 2003 and has thus an authorisation (‘autorisation d’exploitation’) valid until 2018.
The works for the construction of the K3 building started in March 2010. The first tranche of financing of 55 million EUR was included in the 2009 budget. Part of it was spent in 2009 and the difference is included in the ‘Restant à liquider’ (see point 5.2). This difference covers contracts with construction companies, to be signed in 2010. On 15 June 2009, following an open call for tender, the Court signed a service contract with a consortium to be the project manager for the construction of the K3 building. Amongst other things it is the responsibility of the project manager to procure and sign contracts with the construction companies on behalf of the Court, to monitor the execution of the works and to check the relevant invoices before payment. Once the invoices are verified and authorised for payment by the responsible services of the Court it is the responsibility of the project manager to pay the construction companies. Within the above context, the project manager enters into financial commitments towards the construction companies. As a counter-balance to this, the contract between the Court and the project manager requires the Court to have sufficient funds, within the limits of what is available in the budget, to cover the liabilities of the project manager vis-à-vis the construction companies. To ensure this, the Court has signed a fiduciary contract with a local bank and thus holds the funds made available by the budgetary authority. The financial interest of the Union is at the same time protected by the use of the fiduciary contract.
5.4.   Potential liability for litigations
None.


Budget information financial year 2009
A.   Computation of the budget result
The budget result of the year is computed based on the figures of the budgetary implementation. The report on the budgetary and financial management for the financial year 2009 has been published in the Official Journal of the European Union C 120 of 7 May 2010.
2009






(EUR)




Payments on appropriations of the year


– 112 158 034




Payments on carried-over appropriations


–10 765 996




Payments on appropriation related to earmarked revenue


–81 640




Recovery orders of the year, cashed during the year


18 395 817




Recovery orders from previous years, cashed during the year


418 209




Adjustment on recovery orders from previous years


–99




Payment appropriations carried over to next year


–61 670 191




Appropriation carried over from previous years


12 300 284




Adjustment related to the carry-over of earmarked revenue


340 212





Budget result




– 153 221 438





There were no supplements nor reductions between the original and the final budget.
B.   Reconciliation of the economic outturn with the budget result
2009






(EUR)





Economic outturn account of the year




–2 056 723






Ajustment for items included in the economic result but not in the budget result




–83 729 389





Difference between accruals end of previous year and end of current year


1 322 190




Funds received from the Commission


– 104 484 524




Difference in unpaid invoices at year-end


–1 755 403




Depreciation of intangible and tangible fixed assets


3 393 154




Difference in provisions


7 371 386




Difference in value reductions


–1 790




Recovery orders from current year, not yet cashed


– 395 270




Payments on carried-over appropriations


10 765 996




Other


326




Exchange rate differences


54 546





Ajustment for items included in the budget result but not in the economic result




–67 435 326





Asset acquisitions (paid during the year)


–5 466 001




Recovery orders from previous years, cashed during the year


418 209




Payment appropriations carried over to next year


–61 670 191




Cancellation of unused carried over payment appropriations from previous year


1 534 289




Adjustment related to the carry-over of earmarked revenue


340 212




Payments for pensions (they are budgetary payments but booked against provisions)


–2 590 920




Other


– 924





Budget result




– 153 221 438







Independent assurance report
To the Management of the European Court of Auditors
We have examined that the financial resources assigned by the European Commission to the European Court of Auditors (hereafter the ‘Court’) have been used for their intended purposes and that the control procedures put in place by the authorising officers provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations for the financial resources made available and used for the period from 1 January to 31 December 2009.
The maintenance of books and records and the establishing and maintaining of appropriate controls are the responsibility of the Management of the Court. Our responsibility is to express our opinion based on our examination.
We conducted our examination in accordance with the International Standard on Assurance Engagements ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ (ISAE 3000) as adopted by the ‘Commission de surveillance du secteur financier’. This standard requires that we plan and perform our examination such that misuse of the resources materially affecting the books of the Court are detected with reasonable assurance. Our work consisted primarily of examining on a test and sample basis, evidence supporting the fact that:






—


the resources assigned to the Court have been used for their intended purposes,










—


the control procedures put in place provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations.




The criteria used for our examination are the following rules and regulations:






—


Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget (hereafter the ‘Budget’) of the European Communities (hereafter the ‘Financial Regulation’);










—


Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (hereafter the ‘Implementing Rules’);










—


Decision No 36/2007 of the European Court of Auditors relating to the Internal Rules for the implementation of its Budget adopted on 12 and 19 July 2007. These provisions form part of the procedures established by the Treaties, or agreements made by virtue thereof, which concern the operational process linked to the implementation of the Budget.




In particular, the following Internal Rules have been used as criteria:






—


Article 7 — Signatures — ‘Each of the parties involved in the drafting, control and registration of operations to establish and recover revenue or to commit sums and make payments shall sign and date their involvement.’










—


Article 9 — Building projects — ‘Before the Court gives its approval to any contractual undertaking concerning such a project, the service responsible shall submit and explanatory document justifying the compatibility of the project with the financial framework.’










—


Article 16 — Making payments — ‘The accounting officer shall execute the payment orders defined in article 80 of the Financial Regulation after he has checked the mandatory details described in article 103(1) and article 104 of the Implementing Rules.’










—


Article 23.1 — Transfers of appropriations — ‘Pursuant to article 21 of the Financial Regulation, appropriations shall be earmarked for specific purposes by title and chapter; the chapters shall be further subdivided into articles and items.’










—


Article 23.2 — Transfers of appropriations — ‘All requests for transfer shall explain why the appropriations are insufficient. The request for transfer shall be signed by the responsible director.’










—


Article 24 — Carry-overs of appropriations — ‘The responsible authorising officer shall prepare a listing showing the available balance of commitments; this balance, shall be adjusted in the budgetary accounts by taking into consideration the appropriations to be cancelled, and shall show the appropriations to be carried forward.’










—


Article 26 — Property inventories — ‘The inventory of tangible assets shall be kept in a database.’










—


Article 27 — Minimum management and internal control procedures — ‘The management and internal control procedures are drawn up by the authorising officers in accordance with the minimum internal control standards adopted by the Court. Each budget operation is handled (…) by the person responsible for ex-ante verification. (…) If the person responsible for ex-ante verification establishes that the operation in question satisfies the requirements of article 47(3) of the Implementing Rules, he validates it and documents this validation.’




We believe our examination provides a reasonable basis for our opinion.
Based on our work described in this report, nothing has come to our attention that causes us to believe that in all material respects and based on the criteria described above:






(a)


the resources assigned to the Court have not been used for their intended purposes;










(b)


the control procedures in place do not provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations.




Our report is solely for the purpose set forth in the first paragraph and for your information and is not to be used for any other purpose or to be distributed to any other parties, except for publication purpose in the European Official Journal.

Luxembourg, 29 June 2010.


PricewaterhouseCoopers SARL


Represented by

Marianne WEYDERT