COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION - FINANCIAL YEAR 2012
Date: 2013-07-26
Institutions: European Commission
Subjects: balance sheet, consolidated account, general budget (EU), implementation of the budget













EUR-Lex - 52013DC0570 - EN











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52013DC0570

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION - FINANCIAL YEAR 2012 /* COM/2013/0570 final */









              CONTENTS
Page
                                                                                                                                 
NOTE ACCOMPANYING THE CONSOLIDATED
ACCOUNTS                           5
EU BUDGET: FROM PREPARATION TO
DISCHARGE                                     7
                                                                                                                                 
PART I:   CONSOLIDATED FINANCIAL
STATEMENTS AND 
EXPLANATORY NOTES                                                        11
             Balance Sheet                                                                      14
             Statement of Financial Performance                                         15
             Cashflow Statement                                                              16
               Statement of Changes in Net
Assets                                        17
             Notes to the Financial Statements                                           18
PART II:  AGGREGATED REPORTS ON THE IMPLEMENTATION OF 
THE BUDGET AND EXPLANATORY NOTES                                   87
             Result of the implementation of the EU budget and 
explanatory notes                                                                 90
             Aggregated
reports on the implementation of the budget          101
                                                                                                                             
              NOTE ACCOMPANYING THE CONSOLIDATED
ACCOUNTS
              
The consolidated annual accounts of the European
Union for the year 2012 have been prepared on the basis of the information
presented by the institutions and bodies under Article 148.2 of the Financial
Regulation applicable to the general budget of the European Union. I hereby
declare that they were prepared in accordance with Title IX of this Financial
Regulation and with the accounting principles, rules and methods set out in the
notes to the financial statements.
              I have obtained from the accounting
officers of these institutions and bodies, who certified its reliability, all
the information necessary for the production of the accounts that show the
European Union's assets and liabilities and the budgetary implementation.
              I hereby certify that based on this
information, and on such checks as I deemed necessary to sign off the accounts
of the European Commission, I have a reasonable assurance that the accounts
present fairly, in all material aspects, the financial position, the results of
the operations and the cashflow of the European Union.
              
[signed]
              Manfred Kraff
Accounting Officer of
the Commission
24 July 2013
              EU BUDGET: FROM PREPARATION TO
DISCHARGE
The consolidated annual accounts of the European
Union (EU) provide information on the activities of the institutions, agencies
and other bodies of the EU from a budgetary and accrual accounting perspective.
These accounts do not comprise the annual accounts of Member States.
1.         ANNUAL
BUDGET 
The EU Budget finances a wide range
of policies and programmes throughout the EU. In accordance with the priorities
set by the Member States in the multi-annual financial framework (MFF), the
Commission carries out specific programmes, activities and projects in the
field. These could range from supporting education projects for the mobility of
students and teachers, to support for farmers, to productive investments
creating or maintaining jobs, to development aid, to projects aimed at
supporting better work environment for workers in the EU, to enhance the
control of the external borders.
Over 90% of the EU budget goes to
funding such EU policies and activities, which have been agreed by all the
Member States. The direct link between the annual budget and the EU policies is
ensured through activity-based budgeting (ABB). The activity-based budget
nomenclature allows for clear identification of the policy areas of the EU and
the total amount of resources allocated to each of these areas.
The policy areas are subdivided
into some 200 activities of which over 110 include operating budget headings
and are thus reflected in the budget nomenclature as budget chapters. These
policy areas are predominantly operational, since their core activities are
aimed at benefiting a third-party, each within their respective domains of
activity. Other policy areas, however, are horizontal and assure the proper
functioning of the Commission, such as ‘Coordination and legal advice’‚ and
‘Budget’. The activity structure provides the common conceptual framework for
priority setting, planning, budgeting, monitoring and reporting, with the
principal aim of enhancing the economic, efficient and effective use of resources.
The budget is prepared by the
Commission and agreed normally in mid-December by the Parliament and the
Council in accordance with the procedure of Article 314 of the Treaty on the
Functioning of the EU.

2.         HOW IS THE EU FUNDED?
The
EU has two main categories of funding: Own resources revenues and sundry
revenues.

2.1      Own resource revenues
Own resource revenue accrues
automatically to the EU to enable it to finance its budget without the need for
a subsequent decision by national authorities. The overall amount of own
resources needed to finance the budget is determined by total expenditure less
other revenue. The total amount of own resources cannot exceed 1.23 % of the
gross national income (GNI) of the EU. Own resources can be divided into traditional
own resources, the own resource based on value added tax (VAT) and the resource
based on gross national income (GNI). 

2.2      Sundry revenues
Sundry revenues arising from the
activities of the EU normally represent less than 10% of total revenue. These
are, for instance, competition fines and recovery orders to private and public
debtors with regard to the management of EU projects. Penalty payments imposed
by the Court of Justice on Member States that fail to comply with a given
judgment also fall into this category. Any debt not paid at the due date is
subject to default interest. Where debts of third parties other than Member
States remain unpaid, Commission (and Council) can adopt decisions imposing the
obligation to pay which are directly enforceable in accordance with the rules
of civil procedure in force in the territory where enforcement is to be carried
out. Defaulting debtors are subject to debt collecting procedures launched by
the Legal Service of the Commission with the help of external law firms.

3.         HOW THE EU BUDGET IS MANAGED AND SPENT
3.1      Primary operational expenditure
The EU's operational expenditure
covers the various headings of the financial framework and takes different
forms, depending on how the money is paid out and managed. For the 2012
accounts, the Commission classifies its expenditure as follows:
Direct centralised management: this is where the
budget is implemented directly by the Commission services.
Indirect centralised management: this refers to cases
where the Commission confers tasks of implementation of the budget to bodies of
EU law or national law, such as the EU agencies of public law or with public
service missions.
Decentralised management: these are the cases
where the Commission delegates certain tasks for implementation of the budget
to third countries.
Shared management: under this method of
management budget implementation tasks are delegated to Member States. The
majority of the expenditure falls under this mode covering such areas as
agricultural spending and Structural Actions.
Joint management: under this method, the
Commission entrusts certain implementation tasks to an international
organisation.
From 2014 onwards, these
classifications will change following the coming into force of the updated
Financial Regulation.

3.2      The different financial actors within the
Commission
The College of Commissioners
assumes collective political responsibility but in practice does not exercise
itself the budget implementation powers vested in it. It delegates these tasks
each year to individual civil servants accountable to the College and subject
to the Financial Regulation and the Staff Regulations. The staff concerned –
generally Directors-General and Heads of Service - are known as “Authorising
Officers by delegation”. They in turn may further delegate budget
implementation tasks to “Authorising Officers by sub-delegation”.
The responsibility of the Authorising
Officers covers the entire management process, from determining what needs
to be done to achieve the policy objectives set by the institution to managing
the activities launched from both an operational and budgetary standpoint,
including adopting legal commitments, monitoring performance, making payments
and recovering funds, if necessary. Sound financial management and proper
accountability are assured within each of the Services by the separation of
management control (in the hands of the authorising officers) from internal
audit and compliance control with clear internal control standards (based on international
standards), ex-ante and ex-post controls, independent internal auditing on the
basis of risk assessments, and regular reporting on activities to the
individual Commissioners. 
Each Authorising Officer is
required to prepare an Annual Activity Report (AAR) on the activities under his
responsibility. In this AAR, he reports on policy results and on the reasonable
assurance he may have that the resources assigned to the activities described
in his report have been used for their intended purpose and in accordance with
the principles of sound financial management, and that the control procedures
put in place give the necessary guarantees concerning the legality and
regularity of the underlying transactions. On the basis of Article 66 of the Financial
Regulation, the Commission adopts a summary report (synthesis report) on the
AAR’s, the
overall opinion of the Internal Auditor, by which the Commission takes overall
political responsibility for the management of the EU budget in line with
Article 317 of the TFEU. This report and the AAR’s are available at: http://ec.europa.eu/atwork/planning-and-preparing/synthesis-report/index_en.htm.
The Accounting Officer
executes payment and recovery orders drawn up by authorising officers and is
responsible for managing the treasury, laying down accounting rules and
methods, validating accounting systems, keeping the accounts and drawing up the
institution's annual accounts. Furthermore, the Accounting Officer is required
to sign the annual accounts declaring that they present fairly, in all material
aspects, the financial position, the results of the operations and the cashflows.

3.3      Committing to spend the EU budget
Before a legal commitment (for
example a contract or grant agreement) can be entered into with a third party,
there must be a budget line authorising the activity in question in the annual
budget. There must also be sufficient funds on the budget line to cover the expenditure.
If these conditions are met, the funds required must be reserved in the budget
by means of a budgetary commitment made in the accounting system.
No money can be spent from the EU
budget unless and until the Authorising Officer has adopted a legal commitment.

Once approved, the budgetary
commitment is recorded in the budgetary accounting system and the
appropriations are consumed accordingly. This, however, has no effect on the financial
accounts (or general ledger) since no expense has yet been incurred. 
3.4      Making a payment
3.4.1   General rules
No payment can be made unless a
budgetary commitment has already been approved by the Authorising Officer
dealing with the operation in question. Once a payment is approved in the
accounting system, the next step is for the transfer to be made to the
beneficiary’s account. The Commission makes over 1.8 million payments a year.
The Commission is a participant in SWIFT (Society for Worldwide Interbank
Financial Telecommunication). 

3.4.2   Pre-financing, cost statements and eligibility of
expenditure
Pre-financing is a payment intended
to provide the beneficiary with a cash advance, i.e. a float. It may be split
into a number of payments over a period defined in the particular legal
commitment. The float or advance is either used for the purpose for which it
was provided during the period defined in the legal commitment or it is repaid
– if the beneficiary does not incur eligible expenditures he has the obligation
to return the pre-financing advance to the EU. Thus pre-financing paid is not a
definitive expense until the relevant conditions are met and so is recorded as
an asset on the EU balance sheet when the initial payment is made. The amount
of the pre-financing asset is reduced (wholly or partially) by the acceptance
of eligible costs and amounts returned. 
Some time after the payment of the
pre-financing, a cost claim will be received by the relevant EU body so as to
justify how the pre-financing amount was spent by the beneficiary in accordance
with the legal commitment. The rhythm of these cost claims sent during the year
is variable depending on the type of action being funded and the conditions,
and they are not necessarily received at year-end.
Eligibility criteria are defined in
the basic act, in the calls for proposal, in other information documents for
grant beneficiaries and/or in the contractual clauses of the grant agreements
or in the grant decision. After analysis, the eligible amounts are taken into expenses
and the beneficiary is informed about any non-eligible amounts. 
4. Borrowing and lending activities
The EU is empowered by basic acts
deriving from the EU Treaty to adopt borrowing programmes to mobilise the
financial resources necessary to provide financial assistance to Member States
and non-Member States. The European Commission, acting on behalf of the EU,
currently operates three main programmes, the European Financial Stabilisation
Mechanism (EFSM), Balance of payments (BOP) and Macro Financial Assistance (MFA),
under which it may grant loans and fund these by issuing debt instruments in
the capital markets or with financial institutions. Since the funds raised are
back-to-back operations there is no direct impact on the EU budget, however,
from a legal point of view, the debt service of the borrowings remains the
obligation of the EU.

5.         Protection of the EU budget: financial
corrections and recoveries
The Financial Regulation and other
applicable legislation, particularly concerning agriculture and cohesion
policy, give the right to make checks on expenditure up to many years after it
was incurred. Where errors, irregularities or fraud are detected, recoveries or
financial corrections are applied. The detection of errors, irregularities or
fraud and their corrections are the last stage in the operation of control
systems, and are essential in order to demonstrate sound financial management.
In the case of grants, the
eligibility of expenditure charged to the budget is verified by the relevant EU
services, or in the case of shared management, by the Member States, on the
basis of the supporting documents stipulated in the applicable legislation or
in the conditions of each grant. With the aim of optimising the relationship
between the costs and the benefits of control systems, checks on the supporting
documents for final claims in direct centralised management tend to be more
intense than those on interim claims, and thus may detect errors in interim
payments which are corrected by adjustment of the final payment. Furthermore,
the EU and/or the Member State has the obligation to verify the probity of the
supporting documents by making checks on the claimant's premises, during the
implementation of the action financed and/or afterwards (ex-post). There are
various procedures foreseen in the applicable legislation for the process of
dealing with errors, irregularities or fraud detected by the Commission and by
the Member States – more detailed information is included in note 6 of the
financial statements.

6.         FINANCIAL REPORTING
The annual accounts of the EU
comprise two separate but linked parts:
(a)              
Financial
statements.
(b)              
Reports
on implementation of the budget, which provide a detailed record of budget
implementation.
The
annual accounts are adopted by the Commission and presented to the Court of
Auditors for audit and finally to the European Parliament and Council as part
of the discharge process.
In
addition to the above annual reporting, monthly budget implementation reports
are also prepared.

6.1      Financial Statements
It is the responsibility of the
Commission's Accounting Officer to prepare the EU's financial statements and
ensure that they present fairly, in all material aspects, the financial
position, the result of the operations and the cashflows of the EU. These are
drawn up in accordance with EU Accounting Rules that are based on International
Public Sector Accounting Standards (IPSAS). For more information, see note 1 of the financial statements.
6.2      Budgetary accounts
It is the responsibility of the
Commission's Accounting Officer to prepare the reports on implementation of the
budget both on a monthly and annual basis. Only the Commission budget
contains administrative appropriations and operating appropriations. The other
Institutions have only administrative appropriations. Furthermore, the budget
distinguishes between two types of appropriation: non-differentiated
appropriations and differentiated appropriations. Non-differentiated
appropriations are used to finance operations of an annual nature (which comply
with the principle of annuality). Differentiated appropriations were introduced
in order to reconcile the principle of annuality with the need to manage
multi-annual operations. They are intended to cover mainly multi-annual
operations. Differentiated appropriations are split into commitment and payment
appropriations:
–      
commitment
appropriations: cover the total cost of the legal obligations entered into for the
current financial year for operations extending over a number of years.
However, budgetary commitments for actions extending over more than one
financial year may be broken down over several years into annual instalments.
–      
payment
appropriations: cover expenditure arising from commitments entered into in the
current financial year and/or earlier financial years.
With the introduction of
differentiated appropriations, a gap developed between commitments entered into
and payments made: this gap, corresponding to outstanding commitments,
represents the time-lag between when the commitments are entered into and when
the corresponding payments are made. It is known as the RAL ("Reste à
Liquider").

7.         AUDIT AND DISCHARGE

7.1      Audit
The EU’s annual accounts and
resource management are audited by its external auditor, the European Court of
Auditors, which draws up an annual report for the European Parliament and the Council.
The Court's main task is to conduct an external, independent audit of the EU's
annual accounts. As part of its activities, the Court of Auditors produces:
(1)              
an
annual report on the activities financed from the general budget, detailing its
observations on the annual accounts and underlying transactions;
(2)              
an
opinion, based on its audits and given in the annual report in the form of a
statement of assurance, on (i) the reliability of the accounts and (ii) the legality
and regularity of the underlying transactions involving both revenue collected
from taxable persons and payments to final beneficiaries;
(3)              
special
reports giving the findings of audits covering specific areas.

7.2      Discharge
The final step of a budget
lifecycle is the discharge of the budget for a given financial year. The
European Parliament is the discharge authority within the EU. This means that
following the audit and finalisation of the annual accounts it falls to the
Council to recommend and then to the European Parliament to give a discharge to
the Commission and other EU bodies for implementing the EU budget for the
preceding financial year. This decision is based on an examination of the annual
accounts, the Commission's annual evaluation report and the annual report of
the Court of Auditors and replies of the Commission, and also following
questions and further information requests to the Commission.
The discharge represents the
political aspect of the external control of budget implementation and is the
decision by which the European Parliament, acting on a Council recommendation,
"releases" the Commission (and other EU bodies) from its
responsibility for management of a given budget by marking the end of that
budget's existence. This discharge procedure may produce one of three outcomes:
the granting, postponement or the refusal of the discharge. Integral part of the
annual budgetary discharge procedure in the European Parliament are the
hearings with Commissioners who are questioned by the Members of the European
Parliament's Budgetary Control Committee regarding the policy areas under their
responsibility. The final discharge report including specific request to the
Commission for action is adopted in Plenary. The Council discharge recommendation
is adopted by ECOFIN. Both, the European Parliament's discharge report as well
as the Council discharge recommendations are subject to an annual follow up
report in which the Commission outlines the concrete actions it has taken to
implement the requests made by the European Parliament and the Council’s
recommendations.
EUROPEAN UNION
CONSOLIDATED 
FINANCIAL STATEMENTS
AND EXPLANATORY NOTES*
FINANCIAL YEAR 2012
*
It should be noted that due to the rounding of figures into millions of euros, some financial data in
the tables below may appear not to add-up.
              CONTENTS
Page
 
PART I:  CONSOLIDATED FINANCIAL
STATEMENTS AND 
EXPLANATORY NOTES
           Balance Sheet                                                                    14
           Statement of Financial
Performance                                       15
           Cashflow Statement
                                                           16  
           Statement of Changes
in Net Assets                                      17
           Notes to the Financial
Statements:                                        18
                 1.    Significant
Accounting Policies                                19
2.    Notes to the Balance Sheet                                    29
3.    Notes to the Statement of Financial Performance       48
                 4.    Notes
to the Cashflow Statement                            56
                5.    Contingent
Assets & Liabilities and 
                      Other Significant
Disclosures                                  57
                 6.    Protection
of the EU Budget                                    60
                 7.    Financial
Support Mechanisms                                 69
                 8.    Financial
Risk Management                                     75
                 9.    Related
Party Disclosures                                       81
                 10.  Events
after the Balance Sheet Date                        83
                 11.  Scope
of Consolidation                                           84
                     
 BALANCE SHEET 
   ||   ||   ||   ||  EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 NON-CURRENT ASSETS 
 Intangible assets || 2.1 || 188 || 149 
 Property, plant and equipment || 2.2 || 5 978 || 5 071 
 Investments accounted for using the equity method || 2.3 || 392 || 374 
 Financial assets || 2.4 || 62 311 || 43 672 
 Receivables and recoverables || 2.5 || 564 || 289 
 Pre-financing || 2.6 || 44 505 || 44 723 
   ||   || 113 938 || 94 278 
 CURRENT ASSETS ||   ||   ||   
 Inventories || 2.7 || 138 || 94 
 Financial assets || 2.8 || 1 981 || 3 721 
 Receivables and recoverables || 2.9 || 14 039 || 9 477 
 Pre-financing || 2.10 || 13 238 || 11 007 
 Cash and cash equivalents || 2.11 || 10 674 || 18 935 
   ||   || 40 070 || 43 234 
 TOTAL ASSETS ||   || 154 008 || 137 512 
   ||   ||   ||   ||   
 NON-CURRENT LIABILITIES ||   ||   ||   
 Pension and other employee benefits || 2.12 || (42 503) || (34 835) 
 Provisions || 2.13 || (1 258) || (1 495) 
 Financial liabilities || 2.14 || (57 232) || (41 179) 
 Other liabilities || 2.15 || (2 527) || (2 059) 
   ||   || (103 520) || (79 568) 
 CURRENT LIABILITIES ||   ||   ||   
 Provisions || 2.16 || (806) || (270) 
 Financial liabilities || 2.17 || (15) || (51) 
 Payables || 2.18 || (90 083) || (91 473) 
   ||   || (90 904) || (91 794) 
 TOTAL LIABILITIES ||   || (194 424) || (171 362) 
   ||   ||   ||   
 NET ASSETS ||   || (40 416) || (33 850) 
   ||   ||   ||   
 Reserves || 2.19 || 4 061 || 3 608 
 Amounts to be called from Member States* || 2.20 || (44 477) || (37 458) 
 NET ASSETS ||   || (40 416) || (33 850) 
*  The European
Parliament has adopted a budget on 13 December 2012 which
provides for the payment of the Union's short-term liabilities from own
resources to be collected by, or called up from, the Member States in 2013.
Additionally, under Article 83 of the Staff Regulations (Council Regulation
259/68 of 29 February 1968 as amended), the Member States shall jointly
guarantee the liability for pensions.
   || STATEMENT OF FINANCIAL PERFORMANCE 
   ||   ||   ||   
   ||   ||   
   ||   || EUR millions 
   || Note || 2012 || 2011 
 OPERATING REVENUE ||   
 Own resource and contributions revenue || 3.1 || 130 919 || 124 677 
 Other operating revenue || 3.2 || 6 826 || 5 376 
   ||   || 137 745 || 130 053 
 OPERATING EXPENSES ||   ||   ||   
 Administrative expenses || 3.3 || (9 320) || (8 976) 
 Operating expenses || 3.4 || (124 633) || (123 778) 
   ||   || (133 953) || (132 754) 
 SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES ||   || 3 792 || (2 701) 
 Financial revenue || 3.5 || 2 157 || 1 491 
 Financial expenses || 3.6 || (1 942) || (1 355) 
 Movement in pension and other employee benefits liability ||   || (8 846) || 1 212 
 Share of net deficit of joint ventures and associates || 3.7 || (490) || (436) 
 ECONOMIC RESULT OF THE YEAR ||   || (5 329) || (1 789) 
 
   || CASHFLOW STATEMENT 
   ||   ||   ||   
   ||   || EUR millions 
   || Note || 2012 || 2011 
 Economic result of the year ||   || (5 329) || (1 789) 
 Operating activities || 4.2 ||   ||   
 Amortisation ||   || 39 || 33 
 Depreciation ||   || 405 || 361 
 (Increase)/decrease in loans ||   || (16 062) || (27 692) 
 (Increase)/decrease in receivables and recoverables ||   || (4 837) || 1 605 
 (Increase)/decrease in pre-financing ||   || (2 013) || (1 534) 
 (Increase)/decrease in inventories ||   || (44) || (3) 
 Increase/(decrease) in provisions ||   || 299 || 234 
 Increase/(decrease) in financial liabilities ||   || 16 017 || 27 781 
 Increase/(decrease) in other liabilities ||   || 468 || (45) 
 Increase/(decrease) in payables ||   || (1 390) || 6 944 
 Prior year budgetary surplus taken as non-cash revenue ||   || (1 497) || (4 539) 
 Other non-cash movements ||   || 260 || (75) 
 Increase/(decrease) in pension and employee benefits liability ||   || 7 668 || (2 337) 
 Investing activities || 4.3 ||   ||   
 (Increase)/decrease in intangible assets and property, plant and equipment ||   || (1 390) || (693) 
 (Increase)/decrease in investments accounted for using the equity method ||   || (18) || 118 
 (Increase)/decrease in available for sale financial assets ||   || (837) || (1 497) 
 NET CASHFLOW ||   || (8 261) || (3 128) 
 Net increase/(decrease) in cash and cash equivalents ||   || (8 261) || (3 128) 
 Cash and cash equivalents at the beginning of the year || 2.11 || 18 935 || 22 063 
 Cash and cash equivalents at year-end || 2.11 || 10 674 || 18 935 
 STATEMENT OF CHANGES IN NET ASSETS || 
   ||   ||   ||   ||   ||   || EUR millions || 
   || Reserves (A) || Amounts to be called from     Member States (B) || Net Assets =(A)+(B) 
 Fair value reserve || Other reserves || Accumulated Surplus/(Deficit) || Economic result of the year 
 BALANCE AS AT 31.12.2010 || (61) || 3 545 || (48 163) || 17 232 || (27 447) 
 Movement in Guarantee Fund reserve ||   || 165 || (165) ||   || 0 
 Fair value movements || (47) ||   ||   ||   || (47) 
 Other ||   || 2 || (30) ||   || (28) 
 Allocation of the 2010 economic result ||   || 4 || 17 228 || (17 232) || 0 
 2010 budget result credited to Member States ||   ||   || (4 539) ||   || (4 539) 
 Economic result of the year ||   ||   ||   || (1 789) || (1 789) 
 BALANCE AS AT 31.12.2011 || (108) || 3 716 || (35 669) || (1 789) || (33 850) 
 Movement in Guarantee Fund reserve ||   || 168 || (168) ||   || 0 
 Fair value movements || 258 ||   ||   ||   || 258 
 Other ||   || 21 || (19) ||   || 2 
 Allocation of the 2011 economic result ||   || 6 || (1 795) || 1 789 || 0 
 2011 budget result credited to Member States ||   ||   || (1 497) ||   || (1 497) 
 Economic result of the year ||   ||   ||   || (5 329) || (5 329) 
 BALANCE AS AT 31.12.2012 || 150 || 3 911 || (39 148) || (5 329) || (40 416) 
 
Notes to
the Financial Statements
                                                       
            

              1. SIGNIFICANT ACCOUNTING POLICIES
1.1        LEGAL BASIS AND ACCOUNTING RULES
The accounts of the European Union (EU)
are kept in accordance with Regulation (EU, Euratom) No 966/2012 of the
European Parliament and of the Council of 25 October 2012 (OJ L 298 of 26
October 2012), on the financial rules applicable to the general budget of the
Union (hereinafter referred to as the 'Financial Regulation') and Commission Delegated
Regulation (EU) No 1268/2012 of 29 October 2012 laying down detailed rules
of application of this Financial Regulation.
In accordance with article 143 of
the Financial Regulation, the EU prepares its financial statements on the basis
of accrual-based accounting rules that are based on International Public Sector
Accounting Standards (IPSAS). These accounting rules, adopted by the Accounting
Officer of the Commission, have to be applied by all the institutions and EU
bodies falling within the scope of consolidation in order to establish a
uniform set of rules for accounting, valuation and presentation of the accounts
with a view to harmonising the process for drawing up the financial statements
and consolidation. The accounts are kept in Euro on the basis of the calendar
year.

1.2        ACCOUNTING PRINCIPLES
The objective of the financial
statements is to provide information about the financial position, performance
and cashflows of an entity that is useful to a wide range of users. For the EU
as a public sector entity, the objectives are more specifically to provide
information useful for decision making, and to demonstrate the accountability
of the entity for the resources entrusted to it. It is with these goals in mind
that the present document has been drawn up. 
The overall considerations (or accounting
principles) to be followed when preparing the financial statements are laid
down in EU accounting rule 2 and are the same as those described in IPSAS 1,
that is: fair presentation, accrual basis, going concern, consistency of
presentation, aggregation, offsetting and comparative information. 
Preparation of the financial
statements in accordance with the above mentioned rules and principles requires
management to make estimates that affect the reported amounts of certain items
in the balance sheet and statement of financial performance, as well as the
disclosures of contingent assets and liabilities.
1.3        CONSOLIDATION
Scope of consolidation 
The consolidated financial
statements of the EU comprise all significant controlled entities (institutions
and agencies), associates and joint ventures, this being 51 controlled
entities, 5 joint ventures and 4 associates. The complete list of consolidated
entities can be found in note 11.1.
In comparison with 2011, the scope of consolidation has been extended by 1
controlled entity (agency). The impact of the additions on the consolidated
financial statements is not material.

Controlled entities
The decision to include an entity
in the scope of consolidation is based on the control concept. Controlled
entities are all entities over which the EU has, directly or indirectly, the
power to govern the financial and operating policies so as to be able to
benefit from these entities' activities. This power must be presently
exercisable. Controlled entities are fully consolidated. The consolidation
begins at the first date on which control exists, and ends when such control no
longer exists.

The most common indicators of control within the EU are: creation of the entity
through founding treaties or secondary legislation, financing of the entity
from the general budget, the existence of voting rights in the governing
bodies, audit by the European Court of Auditors and discharge by the European
Parliament. It is clear that an assessment for each entity needs to be made in
order to decide whether one or all of the criteria listed above are sufficient
to trigger control.

Under this approach, the EU's institutions (except the ECB) and agencies
(excluding the agencies of the former 2nd pillar) are considered as
under the exclusive control of the EU and are therefore included in the
consolidation scope. Furthermore the European Coal and Steel Community in
Liquidation (ECSC) is also considered as a controlled entity. 
All material inter-company
transactions and balances between EU controlled entities are eliminated, while
unrealised gains and losses on inter-entity transactions are not material and
have therefore not been eliminated.
Joint ventures
A joint venture is a contractual
arrangement whereby the EU and one or more parties (the "venturers")
undertake an economic activity which is subject to joint control. Joint control
is the contractually agreed sharing of control, directly or indirectly, over an
activity embodying service potential.

Participations in joint ventures are accounted for using the equity method
initially recognised at cost. The EU's interest in the results of its jointly
controlled entities is recognised in the statement of financial performance,
and its interest in the movements in reserves is recognised in the reserves.
The initial cost plus all movements (further contributions, share of economic results
and reserve movements, impairments, and dividends) give the book value of the
joint venture in the accounts at the balance sheet date.
Unrealised gains and losses on
transactions between the EU and its jointly controlled entities are not
material and have therefore not been eliminated. The accounting policies of
joint ventures may differ from those adopted by the EU for like transactions
and events in similar circumstances.
Associates
Associates are entities over which
the EU has, directly or indirectly, significant influence but not control. It
is presumed that significant influence is given if the EU holds directly or
indirectly 20% or more of the voting rights.

Participations in associates are accounted for using the equity method,
initially recognised at cost. The EU's share of its associates' results is
recognised in the statement of financial performance, and its share of
movements in reserves is recognised in the reserves. The initial cost plus all
movements (further contributions, share of economic results and reserve
movements, impairments, and dividends) give the book value of the associate in
the accounts at the balance sheet date. Distributions received from an
associate reduce the carrying amount of the asset. Unrealised gains and losses
on transactions between the EU and its associates are not material and have
therefore not been eliminated.

The accounting policies of associates may differ from those adopted by the EU
for like transactions and events in similar circumstances. In cases where the EU
holds 20% or more of an investment capital fund, it does not seek to exert
significant influence. Such funds are therefore treated as financial
instruments and categorised as available-for-sale financial assets.
Non-consolidated entities the funds
of which are managed by the Commission
The funds of the Sickness Insurance
Scheme for staff of the EU, the European Development Fund and the Participant's
Guarantee Fund are managed by the Commission on their behalf, however since
these entities are not controlled by the EU they are therefore not consolidated
in its accounts – see note 11.2 for
further details on the amounts concerned.

1.4        BASIS OF PREPARATION

1.4.1     Currency and basis for conversion
Functional and reporting currency
The financial statements are
presented in millions of euros, the euro being the EU's functional and
reporting currency.

Transactions and balances
Foreign currency transactions are
translated into euros using the exchange rates prevailing at the dates of the
transactions. 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 statement of financial performance.      

Different conversion methods apply
to property, plant and equipment and intangible assets, which retain their
value in euros at the rate that applied at the date when they were purchased.
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:
 EURO Exchange Rates 
 Currency || 31.12.2012 || 31.12.2011 || Currency || 31.12.2012 || 31.12.2011 
 BGN || 1.9558 || 1.9558 || PLN || 4.0740 || 4.4580 
 CZK || 25.1510 || 25.7870 || RON || 4.4445 || 4.3233 
 DKK || 7.4610 || 7.4342 || SEK || 8.5820 || 8.9120 
 GBP || 0.8161 || 0.8353 || CHF || 1.2072 || 1.2156 
 HUF || 292.3000 || 314.5800 || JPY || 113.6100 || 100.2000 
 LVL || 0.6977 || 0.6995 || USD || 1.3194 || 1.2939 
 LTL || 3.4528 || 3.4528 ||   ||   ||   
Changes in
the fair value of monetary financial instruments denominated in a foreign
currency and classified as available-for-sale that relate to a translation
difference are recognised in the statement of financial performance. Translation differences on non-monetary
financial assets and liabilities held at fair value through profit or loss are
recognised in the statement of financial performance. Translation differences
on non-monetary financial instruments classified as available-for-sale are included in the fair value reserve.
1.4.2     Use of
estimates
In accordance with IPSAS and
generally accepted accounting principles, the financial statements necessarily
include amounts based on estimates and assumptions by management based on the
most reliable information available. Significant estimates include, but are not
limited to, amounts for employee benefit liabilities, provisions, financial
risk on inventories and accounts receivables, accrued income and charges,
contingent assets and liabilities, and degree of impairment of intangible
assets and property, plant and equipment. Actual results could differ from
those estimates. Changes in estimates are reflected in the period in which they
become known.

1.5        BALANCE SHEET

1.5.1     Intangible assets
Acquired computer
software licences are stated at historical cost less accumulated amortisation
and impairment losses. The assets are amortised on a straight-line basis over
their estimated useful lives. Internally developed intangible assets are
capitalised when the relevant criteria of the EU accounting rules are met. The
costs capitalisable include all directly attributable costs necessary to
create, produce, and prepare the asset to be capable of operating in the manner
intended by management. Costs associated with research activities,
non-capitalisable development costs and maintenance costs are recognised as
expenses as incurred.
1.5.2     Property,
plant and equipment
All property, plant and
equipment are stated at historical cost less accumulated depreciation and
impairment losses. Historical cost includes expenditure that is directly
attributable to the acquisition or construction of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits or service potential associated with the item will flow to the EU and its cost
can be measured reliably. Repairs and maintenance costs are charged to the statement of financial
performance during the financial period in which they
are incurred. 

Land and works of art are not depreciated as they are deemed to have an
indefinite useful life. Assets under construction are not depreciated as these
assets are not yet available for use. Depreciation on other assets is
calculated using the straight-line method to allocate their cost to their
residual values over their estimated useful lives, as follows:
 Type of asset || Straight line depreciation rate 
 Buildings || 4% 
 Plant, machinery and equipment || 10% to 25% 
 Furniture || 10% to 25% 
 Fixtures and fittings || 10% to 33% 
 Vehicles || 25% 
 Computer hardware || 25% 
 Other tangible assets || 10% to 33% 
Gains or losses on
disposals are determined by comparing proceeds less selling expenses with the
carrying amount of the disposed asset and are included in the statement of financial
performance.
Leases
Leases of tangible
assets, where the EU has substantially all the risks and rewards
of ownership, are classified as finance leases. Finance leases are capitalised
at the inception of the lease at the lower of the fair value of the leased
asset and the present value of the minimum lease payments. Each lease payment
is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The rental obligations, net
of finance charges, are included in other liabilities (non-current and current.)
The interest element of the finance cost is charged to the statement of financial
performance over the lease period so as to produce a
constant periodic interest rate on the remaining balance of the liability for
each period. The assets held under finance leases are depreciated over the
shorter of the assets' useful life and the lease term.

Leases where the lessor retains a significant portion of the risks and rewards
inherent to ownership are classified as operating leases. Payments made under
operating leases are charged to the statement of financial performance on a straight-line basis over the period of the lease.
1.5.3     Impairment
of non-financial assets
Assets that have an indefinite
useful life are not subject to amortisation/depreciation and are tested
annually for impairment. Assets that are
subject to amortisation/depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is
the higher of an asset’s fair value less costs to sell and its value in use.

Intangible assets and property, plant and equipment residual values and useful
lives are reviewed, and adjusted if appropriate, at least once per year. An
asset’s carrying amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated recoverable
amount. If the reasons for impairments recognised in previous years no longer
apply, the impairment losses are reversed accordingly.

1.5.4     Investments
Participations in Associates and
Joint Ventures
Participations in associates and
joint ventures are accounted for using the equity method. The costs of equity
are adjusted to reflect the share of increases or reductions in net assets of
the associates and joint ventures that are attributable to the EU after initial
recognition if there are indications of impairment and written down to the
lower recoverable amount if necessary. The recoverable amount is determined as
described under 1.5.3. If the reason
for impairment ceases to apply at a later date, the impairment loss is reversed
to the carrying amount that would have been determined had no impairment loss
been recognised.

Investments in Venture Capital Funds
Investments in Venture Capital
Funds are classified as available-for-sale financial assets (see 1.5.5) and accordingly, are carried at fair
value with gains and losses arising from
changes in the fair value (including translation differences) recognised
in the fair value reserve.
Since they do not have a quoted
market price in an active market, investments in Venture Capital Funds are valued
on a line-by-line basis at the lower of cost or attributable net asset value
(“NAV”). Unrealised gains resulting from the fair value measurement are
recognised through reserves and unrealised losses are assessed for impairment
so as to determine whether they are recognised as impairment losses in the statement
of financial performance or as changes in the fair value reserve.

1.5.5     Financial assets
Classification
The EU classifies their financial assets in the following categories:
financial assets at fair value through profit or loss; loans and receivables;
held-to-maturity investments; and available for sale financial assets. The
classification of the financial instruments is determined at initial
recognition and re-evaluated at each balance sheet date.
(i) Financial assets at fair
value through profit or loss
A financial asset is classified in
this category if acquired principally for the purpose of selling in the short
term or if so designated by the EU. Derivatives are also categorised in this category. Assets in this category are classified as current assets if they are
expected to be realised within 12 months of the balance sheet date.
(ii) Loans and receivables
Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when
the EU provides money, goods or
services directly to a debtor with no intention of trading the
receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet
date.

(iii) Held-to-maturity investments
Held-to-maturity investments are
non-derivative financial assets with fixed or determinable payments and fixed
maturities that the EU has the
positive intention and ability to hold to maturity. During this financial year,
the EU did not hold any investments
in this category.

(iv) Available
for sale financial assets
Available for sale financial assets
are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are classified as either
current or non-current assets, depending on the time period in which the EU expects
to dispose of them which is usually the remaining maturity at the balance sheet
date. Investments in unconsolidated entities and other equity investments (e.g.
Risk Capital Operations) that are not accounted for using the equity method are
also classified as available for sale financial assets.

Initial
recognition and measurement
Purchases and sales of financial
assets at fair value through profit or loss, held-to-maturity and available for
sale are recognised on trade-date – the date on which the EU commits to purchase or sell the asset. Loans are
recognised when cash is advanced to the borrowers. Financial instruments are
initially recognised at fair value. For all financial assets not carried at
fair value through profit or loss transactions costs are added to the fair
value at initial recognition. Financial assets carried at fair value through
profit or losses are initially recognised at fair value and transaction costs
are expensed in the statement of financial performance.

The fair value of a financial asset on initial recognition is normally the
transaction price (i.e. the fair value of the consideration received). However,
when a long-term loan that carries no interest or an interest below market
conditions is granted, its fair value can be estimated as the present value of
all future cash receipts discounted using the prevailing market rate of
interest for a similar instrument with a similar credit rating.
Loans granted on borrowed funds are
measured at their nominal amount, which is considered to be the fair value of
the loan. The reasoning for this is as follows:
–      
The
“market environment” for EU lending is very specific and different from the
capital market used to issue commercial or government bonds. As lenders in these
markets have the opportunity to choose alternative investments, the opportunity
possibility is factored into market prices. However, this opportunity for
alternative investments does not exist for the EU which is not allowed to
invest money on the capital markets; it only borrows funds for the purpose of
lending at the same rate. This means that there is no alternative lending or
investment option available to the EU for the sums borrowed. Thus, there is no
opportunity cost and therefore no basis of comparison with market rates. In
fact, the EU lending operation itself represents the market. Essentially, since
the opportunity cost "option" is not applicable, the market price
does not fairly reflect the substance of the EU lending transactions. Therefore,
it is not appropriate to determine the fair value of EU lending with reference
to commercial or government bonds. 
–      
Furthermore
as there is no active market or similar transactions to compare with, the
interest rate to be used by the EU for fair valuing its lending operations
under EFSM, BOP and other such loans, should be the interest rate charged.
–      
In
addition, for these loans, there are compensating effects between loans and
borrowings due to their back-to-back character. Thus, the effective interest for
the loan equals the effective interest rate for the related borrowings. The
transaction costs incurred by the EU and then recharged to the beneficiary of
the loan are directly recognised in the statement of financial performance.
Financial
instruments are
derecognised when the rights to receive
cash flows from the investments have expired or have been transferred
and the EU has transferred substantially all risks and rewards of ownership.

Subsequent
measurement
(i) Financial assets at fair value
through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair
value of the ‘financial instruments at fair value through profit or loss’
category are included in the statement of financial performance in the period in which they arise.
(ii) Loans and receivables and
held-to-maturity investments are carried at amortised cost using the effective
interest method. In the case of loans granted on borrowed funds, the same
effective interest rate is applied to both the loans and borrowings since these
loans have the characteristics of 'back-to-back operations' and the differences
between the loan and the borrowing conditions and amounts are not material. The
transaction costs incurred by the EU and then recharged to the beneficiary of
the loan are directly recognised in the statement of financial performance.
(iii) Held to maturity – the EU
currently holds no held to maturity investments.
(iv) Available for sale financial
assets are subsequently carried at fair value. Gains and losses arising from
changes in the fair value of available for sale financial assets are recognised
in the fair value reserve. When assets classified as available for sale financial
assets are sold or impaired, the cumulative fair value adjustments previously
recognised in the fair value reserve are recognised in the statement of
financial performance. Interest on available for sale financial assets
calculated using the effective interest method is recognised in the statement
of financial performance. Dividends on available for sale equity instruments
are recognised when the EU's right to receive payment is established.
The fair values of quoted
investments in active markets are based on current bid prices. If the market
for a financial asset is not active (and for unlisted securities), the EU
establishes a fair value by using valuation techniques. These include the use
of recent arm’s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, option pricing models
and other valuation techniques commonly used by market participants. 
In cases where the fair value of
investments in equity instruments that do not have quoted market price in an
active market cannot be reliably measured, these investments are valued at cost
less impairment losses.

Impairment
of financial assets 
The EU assesses at each
balance sheet date whether there is objective evidence that a financial asset is impaired. A financial asset is
impaired and impairment losses are incurred if, and only if, there is objective
evidence of impairment as a result of one or more events that occurred after
the initial recognition of the asset and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset that can be
reliably estimated.
(a) Assets carried at amortised
cost
If there is objective evidence that
an impairment loss on loans and receivables or held-to-maturity investments
carried at amortised cost has been incurred, the amount of the loss is measured
as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest rate.
The carrying amount of the asset is reduced and the amount of the loss is
recognised in the statement of financial performance. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest rate determined
under the contract. The calculation of the present value of the estimated
future cash flows of a collateralised financial asset reflects the cash flows
that may result from foreclosure less costs for obtaining and selling the
collateral, whether or not foreclosure is probable. If, in a subsequent period,
the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through the statement of
financial performance.
(b) Assets carried at fair value
In the case of
equity investments classified as available for sale financial assets, a
significant or permanent (prolonged) decline in the fair value of the security
below its cost is considered in determining whether the securities are
impaired. If any such evidence exists for available for sale financial assets,
the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in the statement
of financial performance – is removed from
reserves and recognised in the statement of financial performance. Impairment losses recognised in the statement
of financial performance on equity instruments are not reversed through the statement
of financial performance. If, in a subsequent period, the fair value of a debt
instrument classified as available for sale financial asset increases and the
increase can be objectively related to an event occurring after the impairment
loss was recognised, the impairment loss is reversed through the statement of
financial performance.

1.5.6     Inventories
Inventories are stated
at the lower of cost and net realisable value. Cost is determined using the
first-in, first-out (FIFO) method. The cost of finished goods and work in
progress comprises raw materials, direct labour, other directly attributable
costs and related production overheads (based on normal operating capacity).
Net realisable value is the estimated selling price in the ordinary course of
business, less the costs of completion and selling expenses. When inventories
are held for distribution at no charge or for a nominal charge, they are
measured at the lower of cost and current replacement cost. Current replacement
cost is the cost the EU would incur to acquire the asset on the reporting date.
1.5.7     Pre-financing
amounts
Pre-financing is a payment intended
to provide the beneficiary with a cash advance, i.e. a float. It may be split
into a number of payments over a period defined in the particular pre-financing
agreement. The float or advance is repaid or used for the purpose for which it
was provided during the period defined in the agreement. If the beneficiary
does not incur eligible expenditures, he has the obligation to return the
pre-financing advance to the EU. The amount of the pre-financing is reduced
(wholly or partially) by the acceptance of eligible costs (which are recognised
as an expense) and amounts returned.
At year-end, outstanding
pre-financing amounts are valued at the original amount(s) paid less: amounts
returned, eligible amounts expensed, estimated eligible amounts not yet cleared
at year-end, and value reductions.

Interest on pre-financing is recognised as it is earned in accordance with the
provisions of the relevant agreement. An estimate of the accrued interest
revenue, based on the most reliable information, is made at the year-end and
included in the balance sheet.

1.5.8     Receivables
Receivables are carried
at original amount less write-down for impairment. A write-down for impairment
of receivables is established when there is objective evidence that the EU will
not be able to collect all amounts due according to the original terms of
receivables. The amount of the write-down is the difference between the asset’s
carrying amount and the recoverable amount. The amount of the write-down is
recognised in the statement of financial performance. A
general write-down, based on past experience, is also made for outstanding
recovery orders not already subject to a specific write-down. See note 1.5.14 below
concerning the treatment of accrued income at year-end.

1.5.9     Cash and cash equivalents
Cash and cash
equivalents are financial instruments and defined as current assets. They
include cash at hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less.
1.5.10   Pension and
other employee benefits
Pension obligations
The EU operates defined benefit
pension plans. Whilst staff contribute from their salaries one third of the
expected cost of these benefits, the liability is not funded. The liability
recognised in the balance sheet in respect of defined benefit pension plans is
the present value of the defined benefit obligation at the balance sheet date.
The defined benefit obligation is calculated by actuaries using the projected
unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest
rates of government bonds that are denominated in the currency in which the
benefits will be paid, and that have terms to maturity approximating to the
terms of the related pension liability.
Actuarial gains and losses arising
from experience adjustments and changes in actuarial assumptions are recognised
immediately in the statement of financial performance. Past-service costs are
recognised immediately in statement of financial performance, unless the changes to the pension plan are conditional on the employees remaining in service
for a specified period of time (the vesting period). In this case, the
past-service costs are amortised on a straight-line basis over the vesting
period.

Post-employment sickness benefits
The EU provides health benefits to
its employees through the reimbursement of medical expenses. A separate fund
has been created for the day-to-day administration. Both current employees,
pensioners, widowers and their beneficiaries benefit from the system. The
benefits granted to the "inactives" (pensioners, orphans, etc.) are
classified as "Post-Employment Employee Benefits". Given the nature
of these benefits, an actuarial calculation is required. The liability in the
balance sheet is determined on a similar basis as that for the pension
obligations (see above).

1.5.11   Provisions
Provisions are recognised when the
EU has a present legal or constructive obligation towards third parties as a
result of past events, it is more likely than not that an outflow of resources
will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not
recognised for future operating losses. The amount of the provision is the best
estimate of the expenditures expected to be required to settle the present
obligation at the reporting date. Where the provision involves a large number
of items, the obligation is estimated by weighting all possible outcomes by
their associated probabilities (“expected value” method).

1.5.12    Financial liabilities
Financial liabilities are
classified as financial liabilities at fair value through profit or loss or as
financial liabilities carried at amortised cost (borrowings). Borrowings are
composed of borrowings from credit institutions and debts evidenced by
certificates. They are recognised initially at fair value, being their issue
proceeds (fair value of consideration received) net of transaction costs
incurred, then subsequently carried at amortised cost using the effective interest
method; any difference between proceeds, net of transaction costs, and the
redemption value is recognised in the statement of financial performance over
the period of the borrowings using the effective interest method. 

They are classified as non-current liabilities, except for maturities less than
12 months after the balance sheet date. In the case of loans granted on
borrowed funds, the effective interest method may not be applied to loans and
borrowings, based on materiality considerations. The transaction costs incurred
by the EU and then recharged to the beneficiary of the loan are directly
recognised in the statement of financial performance.

Financial liabilities categorised at fair value through profit or loss include derivatives
when their fair value is negative. They follow the same accounting treatment as
financial assets at fair value through profit or loss, see note 1.5.5. 

1.5.13    Payables
A significant amount of the
payables of the EU are not related
to the purchase of goods or services – instead they are unpaid cost claims from
beneficiaries of grants or other EU funding.
They are recorded as payables for the requested amount when the cost claim is
received. Upon verification and acceptance of the eligible costs, the payables are
valued at the accepted and eligible amount.
Payables arising from the purchase
of goods and services are recognised at invoice reception for the original
amount and corresponding expenses are entered in the accounts when the supplies
or services are delivered and accepted by the EU.

1.5.14  Accrued and deferred income and charges
According to the EU accounting
rules, 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 an estimated amount of the transfer obligation of the
period. The calculation of accrued expenses is done in accordance with detailed
operational and practical guidelines issued by the Commission which aim at
ensuring that the financial statements reflect a true and fair view.

Revenue is also accounted for in the period to which it relates. At year-end,
if an invoice is not yet issued but the service has been rendered, the supplies
have been delivered by the EU or a contractual agreement exists (i.e. by
reference to a treaty), an accrued income will be recognised in the financial
statements.

In addition, at year-end, if an invoice is issued but the services have not yet
been rendered or the goods supplied have not yet been delivered, the revenue
will be deferred and recognised in the subsequent accounting period.

1.6      STATEMENT OF FINANCIAL PERFORMANCE

1.6.1   Revenue
Non-exchange revenue
This makes up the vast majority of
the EU's revenue and includes mainly
direct and indirect taxes and own resource amounts. In addition to taxes the EU may also receive payments from other
parties, such as duties, fines and donations.

GNI based resources and VAT resources
Revenue is recognised for the
period for which the European Commission sends
out a call for funds to the Member States claiming their contribution. They are
measured at their “called amount”. As VAT and GNI resources are based on
estimates of the data for the budgetary year concerned, they may be revised as
changes occur until the final data are issued by the Member States. The effect
of a change in estimate is included when determining the net surplus or deficit
for the period in which the change occurred.

Traditional own resources
Receivables and related revenues
are recognised when the relevant monthly A statements (including duties
collected and amounts due that are guaranteed and not contested) are received
from the Member States. At the reporting date, revenue collected by the Member
States for the period but not yet paid to the European Commission is estimated and recognised as accrued revenue. The
quarterly B statements (including duties neither collected nor guaranteed, as
well as guaranteed amounts that have been contested by the debtor) received
from the Member States are recognised as revenue less the collection costs to
which they are entitled (25%). In addition, a value reduction is recognised for
the amount of the estimated recovery gap in the statement of financial
performance.
Fines 
Revenue from fines is recognised
when the EU's decision imposing a fine has been taken and it is officially
notified to the addressee. If there are doubts about the undertaking's
solvency, a value reduction on the entitlement is recognised. After the
decision to impose a fine, the debtors have two months from the date of
notification:
–       either to accept the
decision, in which case they must pay the fine within the time limit laid down
and the amount is definitively collected by the EU;
–      
or
not to accept the decision, in which case they lodge an appeal under EU law. 
However, even if appealed, the
principal of the fine must be paid within the time limit of three months laid
down as the appeal does not have suspensory effect (Article 278 of the EU
Treaty) or, under certain circumstances and subject to the agreement of the
Commission's Accounting Officer, it may present a bank guarantee for the amount
instead.

If the undertaking appeals against the decision, and has already provisionally
paid the fine, the amount is disclosed as a contingent liability. However,
since an appeal against an EU decision by the addressee does not have
suspensory effect, the cash received is used to clear the receivable. If a
guarantee is received instead of payment, the fine remains as a receivable. If
it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover
this risk. If a guarantee had been given instead, then the receivable
outstanding is written-down as required. The accumulated interest received by
the European Commission on the bank
accounts where received payments are deposited is recognised as revenue, and
any contingent liability is increased accordingly.
Exchange revenue
Revenue from the sale of goods and
services is recognised when the significant risk and rewards of ownership of
the goods are transferred to the purchaser. Revenue
associated with a transaction involving the provision of services is recognised
by reference to the stage of completion of the transaction at the reporting
date.

Interest income and expense
Interest income and expense are
recognised in the statement of financial performance using the effective
interest method. This is a method of calculating the amortised cost of a
financial asset or a financial liability and of allocating the interest income
or interest expense over the relevant period. When calculating the effective
interest rate, the EU estimates cash
flows considering all contractual terms of the financial instrument (for
example, prepayment options) but do not consider future credit losses. The
calculation includes all fees and points paid or received between parties to
the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
Once a financial asset or a group
of similar financial assets has been written down as a result of an impairment
loss, interest income is recognised using the rate of interest to discount the
future cash flows for the purpose of measuring the impairment loss.

Dividend income
Dividend income is recognised when
the right to receive payment is established.
1.6.2   Expense
Exchange expenses arising from the
purchase of goods and services are recognised when the supplies are delivered
and accepted by the EU. They are
valued at original invoice cost. Non-exchange expenses are specific to the EU
and account for the majority of its expenses. They relate to transfers to
beneficiaries and can be of three types: entitlements, transfers under
agreement and discretionary grants, contributions and donations.
Transfers are recognised as
expenses in the period during which the events giving rise to the transfer
occurred, as long as the nature of the transfer is allowed by regulation
(Financial Regulation, Staff Regulations, or other regulation) or a contract
has been signed authorising the transfer; any eligibility criteria have been
met by the beneficiary; and a reasonable estimate of the amount can be made.
When a request for payment or cost
claim is received and meets the recognition criteria, it is recognised as an
expense for the eligible amount. At year-end, incurred eligible expenses due to
the beneficiaries but not yet reported are estimated and recorded as accrued
expenses.
1.7      CONTINGENT
ASSETS AND LIABILITIES

1.7.1   Contingent assets
A contingent asset is a possible
asset that arises from past events and of which the existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the EU.
A contingent asset is disclosed when an inflow of economic benefits or service
potential is probable.

1.7.2   Contingent liabilities
A contingent liability is a
possible obligation that arises from past events and of which the existence
will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the EU; or a present obligation that arises
from past events but is not recognised because: it is not probable that an
outflow of resources embodying economic benefits or service potential will be
required to settle the obligation or, in the rare circumstances where the
amount of the obligation cannot be measured with sufficient reliability.
            

              2. NOTES TO THE BALANCE SHEET
NON-CURRENT ASSETS
2.1        INTANGIBLE
ASSETS
   || EUR millions 
   || Amount 
 Gross carrying amount at 31.12.2011 || 301 
 Additions || 89 
 Disposals || (11) 
 Other changes || 0 
 Gross carrying amount at 31.12.2012 || 379 
 Accumulated amortisation at 31.12.2011 || (152) 
 Amortisation charge for the year || (39) 
 Disposals || 4 
 Other changes || (4) 
 Accumulated amortisation at 31.12.2012 || (191) 
   ||   
 Net carrying amount at 31.12.2012 || 188 
 Net carrying amount at 31.12.2011 || 149 
The above amounts
relate primarily to computer software.
2.2        PROPERTY,
PLANT AND EQUIPMENT
Included under assets
under construction at 31 December 2012 are EUR 660 million (2011: EUR 219 million)
of assets relating to the Galileo project, the EU's Global Navigation Satellite
System, being built with the assistance of the European Space Agency (ESA).
When completed, the system will comprise 30 satellites, 2 control centres and
16 ground stations. The amount on the balance sheet reflects the capitalisable costs
incurred by the Commission on this project since 22 October 2011, the date on
which the first two satellites of the system were successfully launched. Prior
to this date, and as explained in previous annual accounts, the Commission
considered the project to be in a research phase, thus in accordance with the
EU accounting rules all costs incurred were expensed. Since the beginning of
the project and until the end of the current financial framework, the foreseen budget
amounts to EUR 3 837 million. For the next financial framework, a further
EUR 5 400 million is foreseen to be spent on; fully deploying the system,
exploiting it, delivering Galileo services until 2020 and preparing the next
generation of the constellation, and this will be entirely financed by the EU
budget. In 2012 an amount of EUR 13 million of non-capitalisable
development cost has been recognised as expenses.
At the balance sheet
date four satellites in total have been launched since October 2011 and once
the subsequent testing of these is complete, this will end the In-Orbit
Validation ("IOV") phase of the project. This phase had been jointly
funded by the EU and ESA and according to the grant agreement concluded between
the two parties, ESA shall make an official transfer of the constructed assets
to the EU. This legal transfer will require the ESA Council's agreement, noting
that all except two Member States of ESA (Norway and Switzerland), are also EU
Member States. At this time, the Commission has no reason to believe that such
a transfer would be blocked by member(s) of ESA. 
 PROPERTY, PLANT AND EQUIPMENT || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
   || Land and || Plant and || Furniture and || Computer  hardware || Other tangible || Finance leases || Assets under || TOTAL 
   || buildings || equipment || vehicles ||   || assets ||   || construction ||   
   ||   ||   ||   ||   ||   ||   ||   ||   
 Gross carrying amount at previous year-end || 4 118 || 528 || 229 || 557 || 228 || 2 685 || 645 || 8 990 
 Additions || 96 || 42 || 22 || 52 || 11 || 511 || 583 || 1 317 
 Disposals || (26) || (23) || (21) || (54) || (11) || 0 || 0 || (135) 
 Transfers between asset categories || 102 || 8 || 0 || 12 || 0 || (14) || (111) || (3) 
 Other changes || 24 || 3 || 3 || 11 || 3 || (1) || 1 || 44 
 Gross carrying amount at year-end || 4 314 || 558 || 233 || 578 || 231 || 3 181 || 1 118 || 10 213 
 Accumulated depreciation at previous year-end || (1 999) || (425) || (166) || (396) || (137) || (796) ||   || (3 919) 
 Depreciation charge for the year || (138) || (45) || (20) || (67) || (21) || (114) ||   || (405) 
 Depreciation written back || 0 || 0 || 0 || 0 || 0 || 1 ||   || 1 
 Disposals || 3 || 23 || 21 || 51 || 10 || 5 ||   || 113 
 Transfers between asset categories || - || 0 || 0 || (11) || 0 || 14 ||   || 3 
 Other changes || (3) || (2) || (1) || (13) || (2) || (7) ||   || (28) 
 Accumulated depreciation at year-end || (2 137) || (449) || (166) || (436) || (150) || (897) ||   || (4 235) 
   ||   ||   ||   ||   ||   ||   ||   ||   
 NET CARRYING AMOUNT AT 31.12.2012 || 2 177 || 109 || 67 || 142 || 81 || 2 284 || 1 118 || 5 978 
 NET CARRYING AMOUNT AT 31.12.2011 || 2 119 || 103 || 63 || 161 || 91 || 1 889 || 645 || 5 071 
Charges still to be
paid in respect of finance leases and similar entitlements are shown in non-current
and current liabilities in the balance sheet (see notes 2.15 and 2.18.1). They break
down as follows:
 Finance Leases || EUR millions 
 Description || Cumulative charges (A) ||   Future amounts to be paid || Total Value   || Subsequent expenditure on assets ||  Asset value   || Depreciation || Net carrying amount =(A+B+C+D) 
 < 1 year || > 1 year   || > 5 years || Total Liability (B) || (A+B) || (C) || (A+B+C) || (D) 
 Land and buildings || 992 || 63 || 342 || 1 686 || 2 091 || 3 083 || 61 || 3 144 || (877) || 2 267 
 Other tangible assets || 18 || 7 || 11 || 1 || 19 || 37 || - || 37 || (20) || 17 
 Total at 31.12.2012 || 1 010 || 70 || 353 || 1 687 || 2 110 || 3 120 || 61 || 3 181 || (897) || 2 284 
 Interest element ||   || 85 || 307 || 502 || 893 ||   ||   ||   ||   ||   
 Total future minimum lease payments at 31.12.2012 ||   || 155 || 660 || 2 189 || 3 003 ||   ||   ||   ||   ||   
 Total future minimum lease payments at 31.12.2011 ||   || 153 || 608 || 1 859 || 2 620 ||   ||   ||   ||   ||   
2.3        INVESTMENTS
ACCOUNTED FOR USING THE EQUITY METHOD
   ||   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Participations in joint ventures || 2.3.1 || 42 || 62 
 Participations in associates || 2.3.2 || 350 || 312 
 Total ||   || 392 || 374 
2.3.1     Participations
in joint ventures
   || EUR millions 
   || GJU || SESAR || ITER || IMI || FCH || Total 
 Amount at 31.12.2011 || 0 || 0 || 0 || 25 || 37 || 62 
 Contributions || - || 70 || 116 || 98 || 54 || 338 
 Share of net result || - || (70) || (106) || (91) || (91) || (358) 
 Amount at 31.12.2012 || 0 || 0 || 10 || 32 || 0 || 42 
Participations in joint ventures
are accounted for using the equity method. The following carrying amounts are
attributable to the EU based on its percentage of participation:
   ||   ||   || EUR millions 
   ||   || 31.12.2012 || 31.12.2011 
 Non-current assets ||   || 226 || 211 
 Current assets ||   || 106 || 123 
 Non-current liabilities ||   || 0 || 0 
 Current liabilities ||   || (291) || (314) 
 Revenue ||   || 8 || 8 
 Expenses ||   || (427) || (379) 
Galileo Joint
Undertaking (GJU) in liquidation
The Galileo Joint Undertaking (GJU)
was put into liquidation at the end of 2006 and the process is still on-going.
As the entity was inactive and still undergoing liquidation in 2012, there were
no revenues or expenses incurred. 
SESAR Joint Undertaking
The aim of this Joint
Undertaking is to ensure the modernisation of the European air traffic
management system and the rapid implementation of the European air traffic
management Master Plan by coordinating and concentrating all relevant research
and development efforts in the EU. At 31 December 2012, the Commission held 46.12
% of the ownership participation in SESAR. The total (indicative) Commission
contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million. The cumulative
unrecognised share of losses is EUR 157 million.
ITER International Fusion Energy Organisation (ITER)
ITER involves the EU
and China, India, Russia, South Korea, Japan and USA. ITER was created to;
manage the ITER facilities, to encourage the exploitation of the ITER
facilities, to promote public understanding and acceptance of fusion energy,
and to undertake any other activities that are necessary to achieve its
purpose. The EU (Euratom) contribution to ITER International is given through
the Fusion for Energy Agency, including also the contributions from Member
States and from Switzerland. The total contribution is legally considered as a
Euratom contribution to ITER since the Member States and Switzerland do not
have ownership interests in ITER. As the EU legally holds the participation in
the joint venture ITER International, the Commission must recognise the
participation in its accounts. At 31 December 2012, the Commission held
44.25 % of the ownership participation in ITER. The total (indicative) Euratom
contribution foreseen for ITER (from 2007 to 2041) is EUR 8 949 million.
Joint Technology Initiatives
Public private
partnerships in the form of Joint Technology Initiatives, which were
implemented through Joint Undertakings within the meaning of Article 187 of the
Treaty, have been created in order to implement the objectives of the Lisbon
Growth and Jobs Agenda. IMI and FCH are included under this heading but three others, ARTEMIS, Clean Sky and
ENIAC,
although legally referred to as joint undertakings, from an accounting
perspective must be considered as associates (and so included as such in note 2.3.2) because
the Commission has a significant influence, not joint control, over them.
IMI Joint Technology Initiative on
Innovative Medicines
The IMI Joint Undertaking supports
pre-competitive pharmaceutical research and development in the Member States
and associated countries, aiming at increasing the research investment in the
biopharmaceutical sector and promotes the involvement of small and medium-sized
enterprises (SME) in its activities. At 31 December
2012, the Commission held 78.58% of the ownership participation in IMI. The
maximum indicative contribution of the Commission shall amount to EUR 1 billion
up to 31.12.2017. 
FCH
Fuel Cells and Hydrogen Joint Undertaking
The objective of the FCH Joint
Undertaking is to combine resources from the public and private sectors to
strengthen research activities with a view to increasing the overall efficiency
of European research efforts and accelerate the development and deployment of
fuel cell and hydrogen technologies. At 31 December 2012,
the Commission held 80.6% of the ownership participation in FCH. The maximum indicative
contribution of the EU shall amount to EUR 470 million up to 31.12.2017. The cumulative
unrecognised share of losses is EUR 12 million.
2.3.2     Participations
in associates
   ||   ||   ||   || EUR millions 
   || EIF || ARTEMIS || Clean Sky || ENIAC || Total 
 Amount at 31.12.2011 || 292 || 0 || 0 || 20 || 312 
 Contributions || - || 22 || 97 || 16 || 135 
 Share of net surplus/(deficit) || 9 || (22) || (97) || (22) || (132) 
 Other equity movements || 35 || - || - || - || 35 
 Amount at 31.12.2012 || 336 || 0 || 0 || 14 || 350 
Participations in associates are
accounted for using the equity method. The following carrying amounts are
attributable to the EU based on its percentage of participation:
   ||   ||   || EUR millions 
   ||   || 31.12.2012 || 31.12.2011 
 Assets ||   || 505 || 460 
 Liabilities ||   || (191) || (162) 
 Revenue ||   || 33 || 28 
 Deficit ||   || (177) || (182) 
European Investment Fund (EIF)
The European Investment Fund (EIF) is the EU's financial
institution specialising in providing risk capital and guarantees to SMEs. The
Commission has paid in 20% of its participation, the balance being uncalled
corresponding to an amount of EUR 720 million.
                                                                                                                 
         EUR
millions
 EIF || Total EIF capital || Commission subscription 
 Total Share Capital || 3 000 || 900 
 Paid-in || (600) || (180) 
 Uncalled || 2 400 || 720 
ARTEMIS Joint Undertaking 
This entity was created
to implement a Joint Technology Initiative with the private sector on Embedded
Computing Systems. The maximum indicative contribution of the Commission shall
amount to EUR 420 million. The cumulative unrecognised share of losses is EUR 5
million (95.2% ownership participation).
Clean Sky Joint Undertaking
The aim of this entity
is to accelerate the development, validation and demonstration of clean air
transport technologies in the EU and in particular to create a radically
innovative Air Transport System with the target of reducing the environmental
impact of air transport. The maximum indicative contribution of the Commission
shall amount to EUR 800 million. The cumulative unrecognised share of losses is EUR 48
million (62.89% ownership participation).
ENIAC Joint Undertaking
The aim of ENIAC is to define a
commonly agreed research agenda in the field of nano-electronics in order to
set research priorities for the development and adoption of key competences in
that area. These objectives will be pursued by pooling resources from the
public and private sectors to support R&D activities in the form of
projects. The total commitment of the EU shall amount to EUR 450 million. At 31 December 2012,
the Commission held 95.90% of the ownership participation in ENIAC.
2.4        NON-CURRENT FINANCIAL ASSETS
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Available for sale financial assets || 2.4.1 || 4 870 || 2 272 
 Loans || 2.4.2 || 57 441 || 41 400 
 Total ||   || 62 311 || 43 672 
2.4.1     Non-current
available for sale financial assets
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Guarantee Fund* || 1 327 || 1 475 
 ECSC in liquidation || 1 102 || - 
 BUFI investments || 832 || - 
 Risk Sharing Finance Facility (RSFF) || 593 || - 
 Loan Guarantee Instrument for TEN-T projects (LGTT) || 52 || - 
 European Chemicals Agency || 52 || - 
 European Bank for Reconstruction & Development || 188 || 188 
 Risk Capital Operations || 123 || 134 
 ETF Start up || 305 || 234 
 Other available for sale investments || 296 || 241 
 Total || 4 870 || 2 272 
* The Guarantee Fund holds
EFSM bonds issued by the Commission, so these have been eliminated.
In order to better
present the economic reality, from 2012 onwards, all available for sale
financial assets, are presented according to their remaining maturity at the
balance sheet date. Assets with a maturity of greater than 1 year at the reporting
date are shown as non-current, whereas assets maturing before end 2013 are
shown as current (see note 2.8). The above 2012
amount for the Guarantee Fund is, unlike in 2011, shown excluding cash and cash
equivalents (2011: EUR 302 million) and the related liability (2011: EUR 1
million). Had the current approach been followed in the 2011 accounts, the
comparatives would have been as follows:
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Guarantee Fund* || 1 327 || 973 
 ECSC in liquidation || 1 102 || 982 
 BUFI investments || 832 || 588 
 Risk Sharing Finance Facility (RSFF) || 593 || 365 
 Loan Guarantee Instrument for TEN-T projects (LGTT) || 52 || 47 
 European Chemicals Agency || 52 || 91 
 European Bank for Reconstruction & Development || 188 || 188 
 Risk Capital Operations || 123 || 134 
 ETF Start up || 305 || 234 
 Other available for sale investments || 296 || 241 
 Total || 4 870 || 3 843 
* The Guarantee Fund holds
EFSM bonds issued by the Commission, so these have been eliminated.
Guarantee Fund
The Guarantee Fund for
external actions covers loans guaranteed by the EU as a result of a Council
Decision, in particular European Investment Bank (EIB) lending operations
outside the EU and loans under macro-financial assistance (MFA) and Euratom
loans outside the EU. It is a long-term instrument to cover any defaulting
loans guaranteed by the EU. The Fund is endowed by payments from the general
budget of the EU equivalent to 9% of the capital value of the operations, the
proceeds from interest on investments made from the Fund's assets, and sums
recovered from defaulting debtors for whom the Fund has had to activate its
guarantee. Any yearly surplus arising shall be paid back as revenue for the EU
budget. 
The EU is required to
include a guarantee reserve to cover loans to third countries. This reserve is
intended to cover the requirements of the Guarantee Fund and, where necessary,
activated guarantees exceeding the amount available in the Fund, so that these
amounts may be charged to the budget. This reserve corresponds to the target
amount of 9% of the loans outstanding at year-end.
ECSC in liquidation
Regarding the ECSC in liquidation
amounts, all available for sale financial assets are debt securities
denominated in EUR and quoted in an active market. At 31 December 2012 debt
securities (expressed at their fair value) reaching final maturity in the
course of 2013 amount to EUR 490 million (2011: EUR 481 million).
BUFI investments
Provisionally cashed
fines are since 1 January 2010 managed by the Commission in a specifically
created fund (BUFI) and invested in financial instruments categorised as
available for sale financial assets.
Risk-Sharing Finance Facility RSFF
The Risk-Sharing Finance
Facility is managed by the EIB and the Commission's investment portfolio is
used to provision financial risk for loans and guarantees given by the EIB to
eligible research projects. In total, a Commission budget of up to EUR 1
billion is foreseen for the period 2007 to 2013, of which up to EUR 800 million
are from the “Cooperation” and up to EUR 200 million from the “Capacities”
specific programmes. The EIB has committed itself to provide the same amount.
At 31 December 2012 the Commission
had contributed, including also EFTA and third country contributions, EUR 1 006
million to the RSFF. The contributions have been invested by the EIB in bonds (fair
value of EUR 754 million at 31 December 2012) and cash & term deposits (EUR
314 million). The amount disclosed as a contingent liability (note 5.2.1), EUR 948 million, represents the
estimated maximum loss at 31 December 2012 that the Commission would suffer in
case of defaults on loans or guarantees given by the EIB within the framework
of the RSFF. It should be noted that the Commission's overall risk is limited
to the amount it contributes to the Facility.
Loan
Guarantee Instrument for TEN-T Projects (LGTT)
The Loan Guarantee Instrument for Ten-T Projects issues
guarantees so as to mitigate revenue risk in the early years of TEN-Transport projects.
Specifically the guarantee would fully cover stand-by credit lines, which would
only be drawn upon in cases where project cash flows are insufficient to
service senior debt. The instrument is a joint financial product of the
Commission and the EIB and the TEN-T regulation has earmarked EUR 500 million
from the EU budget to be allocated during the period 2007-2013. The EIB will
allocate another EUR 500 million, so in total the amount available will be EUR
1 billion to the instrument. 
At 31
December 2012 the Commission had contributed EUR 155 million to the LGTT. This
has been invested by the EIB in bonds (fair value of EUR 75 million at 31
December 2012) and term deposits (EUR 88
million). At end 2012, EUR 523 million of loans have been signed and are thus
covered by the guarantee. The amount disclosed as a contingent liability (note 5.2.1), EUR 39 million, represents the
estimated maximum loss at 31 December 2012 that the Commission would suffer in
case of defaults on loans given by the EIB within the framework of the LGTT
operations. This represents 7.4% of the total amounts guaranteed. It should be
noted that the Commission's overall risk is limited to the amount it
contributes to the Instrument.
European Bank for
Reconstruction and Development (EBRD) 
As the EBRD is not
quoted on any stock exchange and in view of the contractual restrictions
included in the EBRD’s articles of incorporation relating, amongst others, to
the sale of participating interests, capped at acquisition cost and only
authorised to existing shareholders, the Commission's shareholding is valued at
cost less any write-down for impairment.
                                                                                                                             EUR millions
 EBRD || Total EBRD capital || Commission subscription 
 Total Share Capital || 29 601 || 900 
 Paid-in || (6 202) || (188) 
 Uncalled || 23 399 || 712 
Risk Capital Operations
Under Risk Capital Operations amounts
are granted to financial intermediaries to finance equity investments. They are
managed by EIB and financed under the European Neighbourhood Policy.
ETF start up 
The ETF start-up covers
the Growth & Employment programme, the MAP programme, the CIP programme and the Technology
Transfer Pilot Project, under the trusteeship of the EIF, supporting the
creation and financing of start-up SMEs by investing in suitable specialised
venture capital funds. At year-end, a further EUR 122 million relating to ETF Start-up
had been committed to, but not yet been drawn down by the other parties.
Other available for
sale investments
The main amounts
included under other non-current available for sale investments above are the European
Fund for South East Europe (EUR 113 million), the Green for Growth Fund (EUR 39 million) and the GEEREF Fund (EUR 68
million).
2.4.2     Non-current
loans
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Loans granted from the EU budget & ECSC || 2.4.2.1 || 162 || 170 
 Loans granted from borrowed funds || 2.4.2.2 || 57 279 || 41 230 
 Total || 57 441 || 41 400 
2.4.2.1 Loans granted from the European Union budget and the ECSC
in Liquidation
   || EUR millions 
   || Loans with special conditions || ECSC housing loans || Total 
 Total at 31.12.2011 || 151 || 19 || 170 
 New loans || - || - || - 
 Repayments || (17) || (4) || (21) 
 Exchange differences || 1 || - || 1 
 Changes in carrying amount || 11 || 1 || 12 
 Total at 31.12.2012 || 146 || 16 || 162 
Loans with
special conditions are granted at preferential rates as
part of co-operation with non-member countries. All amounts fall due more than
12 months after year-end. The effective interest rates on these loans vary
between 7.73% and 14.507%.
2.4.2.2 Loans granted from borrowed funds
 EUR millions 
   || MFA || Euratom || BOP || EFSM || ECSC in Liquidation || Total 
 Total at 31.12.2011 || 595 || 451 || 11 625 || 28 344 || 266 || 41 281 
 New loans        || 39 || - || - || 15 800 || - || 15 839 
 Repayments || (84) || (24) || - || - || (46) || (154) 
 Exchange differences || - || - || - || - || 5 || 5 
 Changes in carrying amount || (1) || (2) || (2) || 332 || (4) || 323 
 Total at 31.12.2012 || 549 || 425 || 11 623 || 44 476 || 221 || 57 294 
   ||   ||   ||   ||   ||   ||   
 Amount due < 1 year || 15 || - || - || - || - || 15 
   ||   ||   ||   ||   ||   ||   
 Amount due > 1 year || 534 || 425 || 11 623 || 44 476 || 221 || 57 279 
The large increase in
these amounts is due to the EFSM loans disbursed during 2012 and is mirrored by
an increase in the EU's borrowings (see note 2.14). For more
information on borrowing and lending activities, see note 7.
2.5        NON-CURRENT
RECEIVABLES AND RECOVERABLES
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Member States || 545 || 268 
 Other || 19 || 21 
 Total || 564 || 289 
Of the above receivables, EUR 550
million (2011: EUR 273 million) relate to non-exchange transactions. 
The increase in amounts
due from Member States relates to EAGF and EAFRD rural development non-executed
clearance of accounts decisions.
2.6        NON-CURRENT PRE-FINANCING
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Pre-financing || 2.6.1 || 40 790 || 40 625 
 Prepaid expenses || 2.6.2 || 3 715 || 4 098 
 Total ||   || 44 505 || 44 723 
2.6.1     Pre-financing
The timing of the recoverability or
utilisation of the pre-financing governs whether it is disclosed as current or non-current
pre-financing. The utilisation is defined by the project's underlying
agreement. All repayments or utilisation due before twelve months of the
reporting date is disclosed as current pre-financing.
Guarantees received in respect of
pre-financing
These are guarantees
that the Commission requests from beneficiaries that are not Member States, in
certain cases when paying out advance payments (pre-financing). There are two
values to disclose for this type of guarantee, the “nominal” and the “on-going”
values. For the “nominal” value, the generating event is linked to the
existence of the guarantee. For the “on-going” value, the guarantee’s
generating event is the pre-financing payment and/or subsequent clearings. At
31 December 2012 the "nominal" value of guarantees received in respect
of pre-financing amounted to EUR 1 348 million while the "on-going"
value of those guarantees was EUR 1 083 million (2011: EUR 1 330 million and EUR 1 083
million respectively).
Certain pre-financing amounts paid
out under the 7th Research Framework Programme for research and
technological development (FP7) are effectively covered by a Participants
Guarantee Fund (PGF) – the amount of pre-financing paid out in 2012 totalled EUR
4 billion (2011: EUR 3.3 billion). This fund is a separate entity from the EU
and is not consolidated in these accounts – note 11.2.3.
   || EUR millions 
 Management Type || 31.12.2012 || 31.12.2011 
 Direct centralised management || 1 249 || 1 219 
 Indirect centralised management || 1 042 || 774 
 Decentralised management || 677 || 697 
 Shared management || 37 214 || 37 249 
 Joint management || 592 || 686 
 Implemented by other Institutions & Agencies || 16 || - 
 Total || 40 790 || 40 625 
The most significant non-current
pre-financing amounts relate to Structural Actions for the 2007-2013
programming period: the regional development fund (ERDF) and the cohesion fund
(CF) EUR 23.9 billion, the social fund (ESF) EUR 6.5 billion, the agricultural
fund for rural development (EAFRD) EUR 6.1 billion and the fisheries fund (EFF)
EUR 0.6 billion. As many of these projects are long-term in nature, it is
necessary that the related advances are available for more than one year. Thus
these pre-financing amounts are shown as non-current assets.
Pre-financing represents a large
portion of the EU's total assets, and thus receives proper and regular
attention. It should be noted that the level of pre-financing amounts in the
various programmes must be sufficient to ensure the necessary float for the
beneficiary to start the project, while also safeguarding the financial
interests of the EU and taking into consideration legal, operational and
cost-effectiveness constraints. All these elements have been given due
consideration by the Commission in an effort to improve the follow-up of
pre-financing.
2.6.2   Prepaid expenses
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Financial Engineering Instruments || 2 717 || 3 378 
 Aid Schemes || 998 || 720 
 Total || 3 715 || 4 098 
Under the framework of
the structural funds programmes 2007-2013, payments can be made from the EU budget
to Member States so as to contribute to Financial Engineering Instruments (be
it in the form of loans, equity investments or guarantees) set up and managed
under the responsibility of the Member States. Monies that are unused by these
instruments at year-end are the property of the EU (as with standard
pre-financing) and are thus treated as an asset on the Commission’s balance
sheet. However,
the basic legal acts do not oblige the Member States to provide periodic
reports to the Commission on the use made of these advances, and in some cases
not even identify them in the statements of expenditure submitted to the
Commission. Thus, and on the basis of information received from Member States
on the utilisation of funds, an estimation is made at each year-end of the
value of this asset.
Amounts included under the Aid
Schemes heading are the Commission’s estimate of open advances for various aid
schemes
(state aid, market measures of EAGF).
CURRENT ASSETS
2.7        INVENTORIES
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Scientific materials || 81 || 78 
 Other || 57 || 16 
 Total || 138 || 94 
2.8        CURRENT FINANCIAL
ASSETS
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Available for sale financial assets || 2.8.1 || 1 858 || 3 619 
 Loans || 2.8.2 || 123 || 102 
 Total ||   || 1 981 || 3 721 
2.8.1 Current
available for sale financial assets
Available for sale financial assets
are purchased for their investment return or yield, or held to establish a
particular asset structure or a secondary source of liquidity and may therefore
be sold in response to needs for liquidity or changes in interest rates. The
following table provides an overview of available for sale financial assets
with a remaining maturity before end 2013:
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Guarantee Fund || 268 || - 
 ECSC in liquidation || 490 || 1 463 
 BUFI investments || 845 || 1 358 
 Risk Sharing Finance Facility (RSFF) || 160 || 547 
 Loan Guarantee Instrument for TEN-T projects (LGTT) || 23 || 97 
 European Chemicals Agency || 69 || 151 
 Other available for sale investments || 3 || 3 
 Total || 1 858 || 3 619 
As explained under note
2.4.1, the presentation of available for sale
financial assets has been changed from 2012 onwards. Had the same approach been
followed in the 2011 accounts, the comparatives would have been as follows:
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Guarantee Fund || 268 || 201 
 ECSC in liquidation || 490 || 481 
 BUFI investments || 845 || 770 
 Risk Sharing Finance Facility (RSFF) || 160 || 182 
 Loan Guarantee Instrument TEN-T projects (LGTT) || 23 || 49 
 European Chemicals Agency || 69 || 60 
 Other available for sale investments || 3 || 3 
 Total || 1 858 || 1 746 
2.8.2   Current
loans
Included under this heading are loans
with remaining final maturities less than 12 months after the balance sheet
date (see note 2.4.2.2 above for more
details). Also included under this heading are term deposits of the European
External Action Service (EUR 42 million) and the ECSC in liquidation (EUR 22
million).
2.9        CURRENT RECEIVABLES
AND RECOVERABLES
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Fines || 2.9.1 || 4 090 || 3 125 
 Member States || 2.9.2 || 6 270 || 2 693 
 Accrued income and deferred charges || 2.9.3 || 3 368 || 3 267 
 Other receivables & recoverables || 2.9.4 || 311 || 392 
 Total ||   || 14 039 || 9 477 
The total above contains
an estimated EUR 13 729 million (2011: EUR 8 955 million) relating to
non-exchange transactions.
2.9.1     Fines
This concerns amounts to
be recovered relating to fines issued by the Commission of EUR 4 357 million
(2011: EUR 3 369 million) less a write-down of EUR 267 million (2011: EUR 244
million).
Guarantees totalling EUR
2 513 million had been received for the fines outstanding at 31 December 2012
(2011: EUR 3 012 million) in respect of these receivables. It should be noted
that EUR 1 471 million of the receivables were due for payment after 31 December
2012.
2.9.2 Member
States
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 EAGF and Rural Development receivables: ||   ||   
   EAGF || 1 172 || 1 439 
   EAFRD || 14 || 23 
   TRDI || 44 || 37 
   SAPARD || 136 || 142 
   Write-down || (814) || (771) 
   Total || 552 || 870 
 VAT paid and recoverable || 44 || 41 
   ||   ||   
 Own resources: ||   ||   
   Established in the A account || 45 || 29 
   Established in the separate account || 1 294 || 1 263 
   Own resourced to be received || 3 617 || - 
   Write-down || (773) || (779) 
   Other || 16 || 114 
   Total || 4 199 || 627 
 Other receivables from Member States: ||   ||   
   Pre-financing recovery expected || 1 220 || 963 
   Other || 255 || 192 
   Total || 1 475 || 1 155 
 Total || 6 270 || 2 693 
EAGF
and Rural Development receivables
This item primarily covers the
amounts owed by Member States at 31 December, as declared and certified by the
Member States at 15 October. An estimation is made for the receivables arising
after this declaration and up to 31 December. The Commission also estimates a
write-down for the amounts owed by beneficiaries that are unlikely to be
recovered. The fact that such an adjustment is made does not mean that the
Commission is waiving future recovery of these amounts. A deduction of 20% is
also included in the adjustment, and corresponds to what Member States are allowed
to retain to cover administrative costs. 
Own resources receivables
The significant increase of
receivables from Member States is mainly explained by EUR 3 617 million of own
resources to be received at 31 December 2012 relating to the Amending Budgets 5
and 6/2012. These Amending Budgets were adopted on 21 November 2012 and 12
December 2012 respectively. According to Article 10 of Regulation 1150/2000 the
entries corresponding to the readjustments of GNI contributions were carried
out on the first working day of January 2013.
It should be noted that Member
States are entitled to withhold 25% of traditional own resources as collection
costs, thus the above figures are shown net of this deduction. Based on the
estimations sent by Member States, a write-down has been deducted from
receivables from Member States. However, this does not mean that the Commission
is waiving recovery of the amounts covered by this value adjustment.
2.9.3     Accrued
income and deferred charges
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Accrued income || 3 002 || 2 952 
 Deferred charges || 351 || 296 
 Other || 15 || 19 
 Total || 3 368 || 3 267 
The main amount under this heading
is accrued income:
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Own resources || 2 388 || 2 644 
 Agricultural assigned revenue November & December || 218 || 111 
 Cohesion, Regional & Rural Development Funds: financial corrections || 276 || 16 
 Other accrued income || 120 || 181 
 Total || 3 002 || 2 952 
2.9.4     Other
receivables and recoverables
Included under this
heading are mainly recoveries of pre-financing amounts, recovery of expenses as
well as other revenue from administrative and operational actions.
2.10      CURRENT PRE-FINANCING
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Pre-financing || 2.10.1 || 9 548 || 8 089 
 Prepaid expenses || 2.10.2 || 3 690 || 2 918 
 Total ||   || 13 238 || 11 007 
2.10.1   Pre-financing
 EUR millions 
 Management Type || 31.12.2012 || 31.12.2011 
 Direct centralised management || 3 289 || 3 048 
 Indirect centralised management || 3 908 || 3 037 
 Decentralised management || 301 || 330 
 Shared management || 1 008 || 761 
 Joint management || 844 || 803 
 Implemented by other Institutions & Agencies || 198 || 110 
 Total || 9 548 || 8 089 
The current
pre-financing balance has two distinct components: the gross pre-financing and
the accruals made on this pre-financing (made to reflect the related
expenditure estimated that has been incurred at year-end). Both elements have
to be taken into consideration for a proper analysis of the variation of the
current net pre-financing balance from one year to another.
On the one
hand, the year 2012 marked a further decrease of EUR 3 billion in gross current
pre-financing under shared management due to the significant advancement in the
closure process of the previous programming period 2000-2006. On the other
hand, the accruals on this pre-financing have decreased by EUR 3.3 billion,
which led to an overall increase of EUR 0.3 billion in the net current
pre-financing. The reason for these movements lies in the overlapping of the
previous programming period 2000-2006 (which is now in its closure phase) with
the current programming period 2007-2013. Whereas pre-financing related to the
previous programming period is estimated to have been entirely used (i.e. net
balance zero), the pre-financing of the current programming period is estimated
to be only partially used as at 31 December 2012. The remaining part is
estimated to be used in 2013 or later.
A similar
situation is noted for direct centralised management, where the gross
pre-financing has decreased by EUR 741 million, while the net
pre-financing has slightly increased by EUR 241
million.
2.10.2   Prepaid
expenses
   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Financial Engineering Instruments || 1 358 || 1 126 
 Aid Schemes || 2 332 || 1 792 
 Total || 3 690 || 2 918 
2.11      CASH AND CASH EQUIVALENTS
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Unrestricted cash: || 2.11.1 ||   ||   
   Accounts with Treasuries and Central Banks ||   || 2 203 || 7 450 
   Current accounts ||   || 967 || 1 099 
   Imprest accounts ||   || 38 || 43 
   Transfers (cash in transit) ||   || (1) || (5) 
   Total ||   || 3 207 || 8 587 
 Cash belonging to financial instruments & term deposits || 2.11.2 || 2 345 || 2 028 
   ||   ||   ||   
 Restricted cash || 2.11.3 || 5 122 || 8 320 
   ||   ||   ||   
 Total ||   || 10 674 || 18 935 
2.11.1   Unrestricted
cash
Unrestricted cash covers
all the funds which the EU keeps in its accounts in each Member State and EFTA
country (treasury or central bank), as well as in current accounts, imprest
accounts and petty cash.
The significant decrease in
unrestricted cash was mainly caused by a decrease in the accounts with
treasuries and central banks. The ending balance of 2012 was significantly
lower than the ending balance of 2011 due to the high budget execution rate for
2012. Moreover, additional cash resources related to the Amending Budget 5/2012
and the Amending Budget 6/2012 were only received in 2013.
2.11.2   Cash belonging
to financial instruments & term deposits
Amounts shown under this heading
are mainly cash equivalents (EUR 1 845 million) managed by fiduciaries on
behalf of the Commission for the purpose of implementing particular financial
instruments programmes funded by the EU budget and other term deposits (EUR 500
million). The cash belonging to financial instruments can thus only be used in
the financial instruments programme concerned. At year-end, EUR 100 million had
been committed to financial instruments managed by fiduciaries, but not yet
been drawn down by the other parties.
As explained under note 2.4.1, the presentation of available for sale
financial assets and the related cash and cash equivalents has been changed
from 2012 onwards. In 2012, this heading includes the cash and cash equivalents
of the Guarantee Fund whereas the 2011 total does not include the EUR 302 million
cash and cash equivalents of the Guarantee Fund for 2011, which had been shown
under non-current available for sale financial assets. Had the new
presentation, including showing cash belonging to all financial instruments on
a separate line, been followed in the 2011 accounts, the comparatives would
have been EUR 963 million for current accounts and EUR 2 466 million for cash belonging to financial
instruments & term deposits.
2.11.3   Restricted
cash
Restricted cash refers to amounts
received in connection with fines issued by the Commission for which the case
is still open. These are kept in specific deposit accounts that are not used
for any other activities. In case an appeal has been
lodged or where it is unknown if an appeal will be made by the other party the
underlying amount is shown as contingent liability in note 5.2.
The decrease in
restricted cash is due to two main reasons: on the one hand there were a number
of final decisions by the Court of Justice which concerned significant amounts,
and on the other hand, there was an increased use made of the specifically
created fund for fines (BUFI). Since 1 January 2010 all provisionally cashed
fines are managed by the Commission in this fund and invested in financial
instruments categorised as available for sale financial assets (see note 2.4 and 2.8).
                                    
NON-CURRENT LIABILITIES
2.12      PENSION
AND OTHER EMPLOYEE BENEFITS
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Pensions – Staff || 37 528 || 30 617 
 Pensions – Others || 968 || 777 
 Joint Sickness Insurance Scheme || 4 007 || 3 441 
 Total || 42 503 || 34 835 
The significant increase in the
pension liability is explained by the sizeable decrease in the discount rate
applied, resulting in a large actuarial loss for the year.
2.12.1   Pensions –
Staff
In accordance with
Article 83 of the Staff Regulations, the payment of the benefits provided for
in the staff pension scheme (PSEO: Pension Scheme of European Officials) constitutes
an expenditure in the EU's budget. The scheme is not funded, but the Member
States guarantee the payment of these benefits collectively according to the
scale fixed for the financing of this expenditure. In addition, officials
contribute one third to the long-term financing of this scheme via a compulsory
contribution.
The liabilities of the pension
scheme were assessed on the basis of the number of staff and retired staff at
31 December 2012 and on the rules of the Staff Regulations applicable at this
date. This valuation was carried out in accordance with the methodology of IPSAS
25 (and therefore also EU accounting rule 12). The
method used to calculate this liability is the projected unit credit method.
The main actuarial assumptions available at the valuation date and used on the
valuation were as follows: 
   ||   
 Staff pension liability || 31.12.2012 || 31.12.2011 
 Nominal discount rate || 3.6% || 4.9% 
 Expected inflation rate || 2.0% || 1.8% 
 Real discount rate || 1.6% || 3.0% 
 Probability of marriage: Man/Woman || 84%/38% || 84%/38% 
 General Salary Growth/pension revaluation || 0% || 0% 
 2008 International Civil Servants Life Table || Yes || Yes 
 Movement in Gross Employee Benefits liability || EUR millions 
   || Staff pension liability || Sickness Insurance 
 Gross Liability at previous year-end || 34 233 || 3 711 
 Service/normal cost || 1 144 || - 
 Interest cost || 1 043 || - 
 Benefits paid || (1 243) || - 
 Actuarial losses || 6 691 || 567 
 Change due to newcomers || 93 || - 
 Gross Liability at year-end || 41 961 || 4 278 
 Correction coefficients applied to pensions || 1 022 || N/A 
 Deduction of taxes on pensions || (5 455) || N/A 
 Plan assets || N/A || (271) 
 Net liability at year-end || 37 528 || 4 007 
2.12.2   Pensions
– Others
This refers to the
liability relating to the pension obligations towards Members and former
Members of the Commission, the Court of Justice (and General Court) and the
Court of Auditors, the Secretaries General of the Council, the Ombudsman, the
European Data Protection Supervisor, and the European Union Civil Service
Tribunal. Also included under this heading is a liability relating to the
pensions of Members of the European Parliament.
2.12.3   Joint
Sickness Insurance Scheme
A valuation is also made for the estimated liability that the EU
has regarding its contributions to the Joint Sickness Insurance Scheme in
relation to its retired staff. The gross liability has been valued at EUR 4 278
million and plan assets of EUR 271 million are deducted from the gross
liability to arrive at the net amount. The discount rate and the general salary
growth used in the calculation are the same as those used in the staff pension
valuation.
2.13      NON-CURRENT PROVISIONS
   ||   ||   || EUR millions 
   || Amount at 31.12.2011 || Additional provisions || Unused amounts reversed || Amounts used || Transfer to current || Change in estimation || Amount at 31.12.2012 
 Legal cases || 368 || 58 || (241) || (53) || 0 || 0 || 132 
 Nuclear site dismantling || 1 005 || 0 || 0 || (3) || (29) || 24 || 997 
 Financial || 100 || 38 || 0 || 0 || (33) || 3 || 108 
 Other || 22 || 1 || (1) || (1) || 0 || 0 || 21 
 Total || 1 495 || 97 || (242) || (57) || (62) || 27 || 1 258 
Legal cases
This is the estimate of
amounts that will probably have to be paid out more than 12 months after the
year-end in relation to a number of on-going legal cases. The decrease in legal
cases provisions is mainly due to the closure of an EAGF court case in 2012.
Nuclear
site dismantlement
In 2008 a consortium of
independent experts made an update of their 2003 study into the estimated costs
of the decommissioning of the JRC nuclear facilities and waste management
programme. Their revised estimate of EUR 1 222 million (previously EUR 1 145
million) is taken as the basis for the provision to be included in the
financial statements. In accordance with the EU accounting rules, this estimate
is indexed for inflation and then discounted to its net present value (using
the Euro zero-coupon swap curve). In view of the estimated duration of this
programme (around 20 years), it should be pointed out that there is some
uncertainty about this estimate, and the final cost could be different from the
amounts currently entered.
Financial provisions
These concern provisions which represent the
estimated losses that will be incurred in relation to the guarantees given
under the SME Guarantee Facility 1998, the SME Guarantee Facility 2001 and the
SME Guarantee Facility 2007 under CIP and the European Progress Microfinance Facility (Guarantee), where the
European Investment Fund (EIF) is empowered to issue guarantees in its own name
but on behalf of and at the risk of the Commission. The financial risk linked
to the drawn and undrawn guarantees is, however, capped. Non-current financial
provisions are discounted to their net present value (using the Euro Swap
annual rate).
2.14      NON-CURRENT
FINANCIAL LIABILITIES
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Non-current borrowings || 57 252 || 41 200 
 Elimination Guarantee Fund* || (20) || (21) 
 Total || 57 232 || 41 179 
* The Guarantee Fund holds EFSM
bonds issued by the Commission, so these need to be eliminated.
Non-current
borrowings
              ||   || EUR millions 
   || MFA || Euratom || BOP || EFSM || ECSC in Liquidation || Total 
 Total at 31.12.2011 || 595 || 451 || 11 625 || 28 344 || 236 || 41 251 
 New borrowings          || 39 || - || - || 15 800 || - || 15 839 
 Repayments || (84) || (24) || - || - || (46) || (154) 
 Exchange differences || - || - || - || - || 4 || 4 
 Changes in carrying amount || (1) || (2) || (2) || 332 || - || 327 
 Total at 31.12.2012 || 549 || 425 || 11 623 || 44 476 || 194 || 57 267 
   ||   ||   ||   ||   ||   ||   
 Amount due < 1 year || 15 || - || - || - || - || 15 
   ||   ||   ||   ||   ||   ||   
 Amount due > 1 year || 534 || 425 || 11 623 || 44 476 || 194 || 57 252 
This heading includes
borrowings due by the EU maturing in over one year. Borrowings include debts evidenced
by certificates amounting to EUR 57 026 million (2011: EUR 41 011 million). The changes in carrying amount correspond to the
change in accrued interests. For more information on borrowing and lending
activities, see note 7.
2.15      OTHER NON-CURRENT
LIABILITIES
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Finance Leasing debts || 2 040 || 1 603 
 Buildings paid for in instalments || 352 || 367 
 Other || 135 || 89 
 Total || 2 527 || 2 059 
CURRENT LIABILITIES
2.16      CURRENT
PROVISIONS
   ||   ||   || EUR millions 
   || Amount at 31.12.2011 || Additional provisions || Unused amounts reversed || Amounts used || Transfers from non- current || Change in estimation || Amount at 31.12.2012 
 Legal cases || 17 || 218 || (2) || (9) || 0 || 0 || 224 
 Nuclear site dismantlement || 29 || 0 || 0 || (29) || 29 || 0 || 29 
 Financial || 165 || 30 || 0 || (43) || 33 || 3 || 188 
 Other || 59 || 342 || (32) || (5) || 1 || 0 || 365 
 Total || 270 || 590 || (34) || (86) || 63 || 3 || 806 
2.17      CURRENT
FINANCIAL LIABILITIES
This heading relates to
borrowings (see note 2.14) that mature during
the 12
months following the balance sheet date. 
2.18      PAYABLES
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Current portion of non-current liabilities || 2.18.1 || 89 || 81 
 Payables || 2.18.2 || 21 558 || 22 311 
 Accrued charges and deferred income || 2.18.3 || 68 436 || 69 081 
 Total ||   || 90 083 || 91 473 
2.18.1   Current
portion of non-current liabilities
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Finance Leasing debts || 70 || 66 
 Other || 19 || 15 
 Total || 89 || 81 
2.18.2   Payables
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Member States || 23 029 || 22 200 
 Suppliers and other || 1 704 || 1 611 
 Estimated non-eligible amounts and pending pre-payments || (3 175) || (1 500) 
 Total || 21 558 || 22 311 
Payables include cost statements
received by the Commission under the framework of the grant activities. They
are credited for the amount being claimed from the moment the demand is
received. If the counterpart is a Member State, they are classified as such. It
is the same procedure for invoices and credit notes received under procurement
activities. The cost claims concerned have been taken into account for the
year-end cut off procedures. Following these cut off entries, estimated
eligible amounts have therefore been recorded in the accounts as expenses,
while the remaining part is disclosed as “Estimated non-eligible amounts and pending prepayments” (see
below). In order not to overestimate assets and liabilities, it was decided to
present the net amount under current liabilities.
Member
States
The primary amounts
here relate to unpaid cost claims for Structural Fund actions (EUR 5.6 billion
for ESF and EUR 15.6 billion for ERDF and CF).
Suppliers and other
Included under this
heading are sundry payables, amounts owed following grant and procurement
activities, as well as amounts payable to public bodies and non-consolidated
entities (e.g. the EDF).
Estimated
non-eligible amounts and pending prepayments
Payables are reduced by that part
of the requests for reimbursement received, but not yet checked, that was
considered to be ineligible. The largest amounts concern the Structural Actions
DGs. Payables are also reduced by the part of requests for reimbursement
received corresponding to prepaid expenditure still to pay at year end (EUR 2.4
billion).
2.18.3   Accrued
charges and deferred income
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Accrued charges || 68 216 || 68 577 
 Deferred income || 201 || 490 
 Other || 19 || 14 
 Total || 68 436 || 69 081 
The split of accrued
charges is as follows: 
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Agriculture and Rural Development: ||   ||   
   EAGF: Direct aid period 16/10 to 31/12 || 33 040 || 33 774 
   EAGF: Direct Aid – other entitlements || 11 492 || 10 701 
   EAGF: Sugar restructuring || 0 || 224 
   EAGF: Other || 1 || 23 
   EAFRD || 12 497 || 12 127 
   Total || 57 030 || 56 849 
 Structural Actions: ||   ||   
   EFF/FIFG || 66 || 56 
   ERDF & Cohesion Fund || 4 359 || 4 791 
   ISPA || 382 || 172 
   ESF || 1 378 || 1 687 
   Total || 6 185 || 6 706 
 Other accrued charges: ||   ||   
   Research & Development || 1 077 || 1 157 
   Other || 3 924 || 3 865 
   Total || 5 001 || 5 022 
 Total || 68 216 || 68 577 
NET ASSETS
2.19      RESERVES
   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Fair value reserve || 2.19.1 || 150 || (108) 
 Guarantee Fund reserve || 2.19.2 || 2 079 || 1 911 
 Other reserves || 2.19.3 || 1 832 || 1 805 
 Total ||   || 4 061 || 3 608 
2.19.1   Fair
value reserve
In accordance with the
accounting rules, the adjustment to fair value of available for sale financial assets
is accounted for through the fair value reserve. In 2012 a net EUR 5 million (2011:
EUR 24 million) of accumulated fair value decreases have been taken out of the
fair value reserve and recognised in the statement of financial performance relating to
available for sale financial assets.
2.19.2   Guarantee
Fund reserve
This reserve reflects
the 9% target amount of the outstanding amounts guaranteed by the Fund that is
required to be kept as assets.
2.19.3 Other
reserves
The amount relates primarily to the
ECSC in liquidation reserve (EUR 1 534 million) for the assets of the Research
Fund for Coal and Steel and was created in the context of the winding-up of the
ECSC.
2.20      AMOUNTS TO
BE CALLED FROM MEMBER STATES
   || EUR millions 
   || Amount 
 Amounts to be called from Member States at 31.12.2011 || 37 458 
 Return of 2011 budget surplus to Member States || 1 497 
 Movement in Guarantee Fund reserve || 168 
 Other reserve movements || 25 
 Economic result of the year || 5 329 
 Total amounts to be called from Members States at 31.12.2012 || 44 477 
   ||   
 Split between: ||   
   Employee benefits || 42 503 
   Other amounts || 1 974 
This amount represents
that part of the expenses already incurred by the Commission up to 31 December
2012 that must be funded by future budgets. Many expenses are recognised under
accrual accounting rules in the year N although they may be actually paid in
year N+1 and funded using the budget of year N+1. The inclusion in the accounts
of these liabilities coupled with the fact that the corresponding amounts are
financed from future budgets, results in liabilities greatly exceeding assets
at the year-end. The most significant amounts to be highlighted are the EAGF
activities. The majority of the amounts to be called are in fact paid by the
Member States in less than 12 months after the end of the financial year in
question as part of the budget of the following year. 
It is essentially only
the employee benefits obligations of the Commission towards its staff which are
paid out over a longer period, noting that the funding of the pension payments
by the annual budgets is guaranteed by the Member States. For information
purposes only, an estimate of the split of future employee benefit payments is
given below:
   || EUR millions 
   || Amount 
 Amounts to be paid in 2013 || 1 399 
 Amounts to be paid after 2013 || 41 104 
 Total employee benefits liability at 31.12.2012 || 42 503 
It should also be noted
that the above has no effect on the budget result – budget revenue should
always equal or exceed budget expenditure and any excess of revenue is returned
to Member States.
              3. NOTES TO THE STATEMENT OF FINANCIAL
PERFORMANCE
3.1       OWN RESOURCE AND CONTRIBUTIONS
REVENUE
   ||   ||   || EUR millions 
   || Note || 2012 || 2011 
 GNI resources ||   || 98 061 || 88 442 
 Traditional own resources: Customs duties ||   || 16 087 || 16 528 
                                        Sugar levies ||   || 157 || 161 
 VAT resources ||   || 14 871 || 14 763 
 Own resource revenue || 3.1.1 || 129 176 || 119 894 
 Budgetary adjustments || 3.1.2 || 1 439 || 4 533 
 Contributions of third countries (incl. EFTA) ||   || 304 || 250 
 Total ||   || 130 919 || 124 677 
3.1.1     Own
resource revenue
Own resources is the
primary element of the EU’s operating revenue. Thus the bulk of expenditure is financed
by own resources as other revenue represents only a minor part of the total
financing. There are three categories of own resources: traditional own
resources (“TOR”), the VAT-based resource and the GNI-based resource.
Traditional own resources comprise sugar levies and customs duties. A
correction mechanism in respect of budgetary imbalances (UK Rebate) as well as
a gross reduction in the annual GNI-based contribution of Netherlands and
Sweden are also part of the own resources system. Member States retain, by way
of collection costs, 25% of traditional own resources, and the above amounts
are shown net of this deduction.
It should be noted that
in 2011 the Belgian authorities submitted a refund claim of approximately EUR 126 million
(net) concerning amounts transferred to the EU budget under TOR. As inspections
carried out by the Commission and audits performed by the Court of Auditors
have highlighted some deficiencies in the Belgian clearance and accounting
systems, which also impacted the reliability of amounts transferred to the EU
budget under TOR, an external audit was conducted. An additional Commission
services' inspection evaluating the results of the audit, including the refund
claim and the corrective actions taken where necessary, has taken place in the
first semester of 2013. The audit conclusions, supported by the Commission's
inspection, confirmed that the refund claim is free of material error and that
its calculation is reliable. Consequently a provision was booked at 31 December
2012 in the Commission's accounts to cover the reimbursement of the claim to
the Belgian authorities, which will be processed in 2013.
3.1.2     Budgetary
adjustments
The budgetary adjustments
include the budget surplus from 2011 (EUR 1 497 million) which is indirectly
refunded to Member States by deduction of the amounts of own resources they
have to transfer to the EU in the following year – thus it is a revenue for 2012.

 
3.2       OTHER OPERATING REVENUE
   ||   || EUR millions 
   || Note || 2012 || 2011 
 Fines || 3.2.1 || 1 884 || 868 
   ||   ||   ||   
 Agricultural levies || 3.2.2 || 87 || 65 
   ||   ||   ||   
 Recovery of expenses: || 3.2.3 ||   ||   
 Direct centralised management ||   || 63 || 76 
 Indirect centralised management ||   || 30 || 17 
 Decentralised management ||   || 27 || 106 
 Joint management ||   || 8 || 3 
 Shared management ||   || 1 376 || 845 
 Total ||   || 1 504 || 1 047 
 Revenue from administrative operations: || 3.2.4 ||   ||   
 Staff ||   || 1 209 || 1 141 
 Property, plant and equipment related revenue ||   || 23 || 94 
 Other administrative revenue ||   || 59 || 119 
 Total ||   || 1 291 || 1 354 
 Miscellaneous operating revenue: || 3.2.5 ||   ||   
 Adjustments/provisions ||   || 280 || 59 
 Exchange gains ||   || 335 || 476 
 Other ||   || 1 445 || 1 507 
 Total ||   || 2 060 || 2 042 
 Total ||   || 6 826 || 5 376 
3.2.1     Fines
These revenues relate
to fines imposed by the Commission for infringement of competition rules. Receivables
and related revenues are recognised when the Commission decision imposing a
fine has been taken and it is officially notified to the addressee. The
increase in fines revenue as compared to 2011 is due to a high value fine case
in 2012 relating to TV and computer monitor tubes.
In March 2013 Microsoft has been
fined EUR 561 million for failing to promote a range of web browsers, rather
than just Internet Explorer, to users in the EU.
3.2.2     Agricultural
levies
These amounts concern primarily milk levies which are a market
management tool aimed at penalising milk producers who exceed their reference
quantities. As it is not linked to prior payments by the Commission, it is in
practice considered as revenue for a specific purpose.
3.2.3     Recovery
of expenses
This heading represents
the recovery orders issued by the Commission and the deduction from subsequent
payments recorded in the Commission's accounting system, to recover
expenditures previously paid out from the general budget, based on controls,
closed audits or eligibility analysis, together with recovery orders issued by
Member States to beneficiaries of EAGF expenditure. It also includes the
variation of accrued income estimations from the previous year-end to the
current. 
It should be noted that
these figures represent the accounting impact of EU corrective activities only,
based on the EU accounting rules in force. For this reason, these figures
cannot and do not show the full extent of the recovery of EU expenditure,
particularly for the significant spending areas of Structural Actions where
specific mechanisms are in place to ensure the return of ineligible monies,
most of which do not involve the issuance of a recovery order and therefore do
not impact the EU accounting system. Moreover, recoveries of pre-financing
amounts are also not included as revenue, in accordance with the EU accounting
rules. More details on financial corrections and recoveries of expenses are
given in Note 6.
Agriculture: EAGF and rural
development
In the framework of the European
Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural
Development (EAFRD), amounts accounted for as revenue of the year under this
heading are EUR 1 020 million, made up as follows:
-                
conformity
corrections decided during the year, EUR 724 million;
-                
fraud
and irregularities EUR 296 million: being reimbursements declared by Member
States and recovered during the year of EUR 195 million plus the net increase
in the outstanding amounts declared by Member States to be recovered at
year-end concerning fraud and irregularities of EUR 101 million. 
Structural Actions
-                
The
recovery of expenditure under the Structural actions included under this
heading amounted to EUR 356 million (2011: EUR 109 million). The main amounts
in this sub-heading include recovery orders issued by the Commission to recover
undue expenditure made in previous years for an amount of EUR 95 million (including EUR 5 million
related to EAGGF Guidance) and the variation (increase) of the accrued income at
year-end for EUR 261 million. 
Recovery orders are issued only in
the following cases:
-     formal
financial correction decisions by the Commission following the detection of
irregular expenditure in the amounts claimed by Member States 
-     adjustments
at closure of a programme leading to a reduction in the EU contribution where a
Member State has not declared sufficient eligible expenditure to justify the
total pre-financing and interim payments already made; such operations may be
without a formal Commission decision if accepted by the Member State;
-     repayment
of amounts recovered after closure following the conclusion of legal
proceedings which were pending at the time of closure.
Other recovery orders issued under
Structural Actions concern the recovery of pre-financing – see note 6.5. These amounts are not shown as revenue, but credited
to the pre-financing heading on the balance sheet.
3.2.4     Revenue
from administrative operations
This
revenue arises from deductions from staff salaries and is made up primarily of
two amounts – staff pension contributions and taxes on income.
3.2.5     Miscellaneous
operating revenue
An
amount of EUR 672 million (2011: EUR 535 million) relates to amounts received
from accession countries. Exchange gains, except on financial activities dealt
with in note 3.5 below, are also included under this heading.
These arise from the everyday activities and related transactions made in
currencies other than the Euro, as well as the year-end revaluation required to
prepare the accounts. They contain both realised and unrealised gains. There
was a net exchange gain for the year of EUR 52 million
(2011: EUR 94 million).
3.3       ADMINISTRATIVE EXPENSES
   ||   || EUR millions 
   || 2012 || 2011 
 Staff expenses || 5 708 || 5 416 
 Depreciation and impairment || 451 || 412 
 Other administrative expenses || 3 161 || 3 148 
 Total || 9 320 || 8 976 
Included under this heading are
expenses of EUR 379 million (2011: EUR 358
million) relating to operating leases – amounts committed to be paid during the
remaining term of these lease contracts are as follows:
   ||   ||   ||   ||   || EUR millions 
   || Future amounts to be paid 
 < 1 year || 1- 5 years || > 5 years || Total 
 Buildings || 340 || 947 || 575 || 1 862 
 IT materials and other equipment || 5 || 7 || 0 || 12 
 Total || 345 || 954 || 575 || 1 874 
 
3.4      OPERATING
EXPENSES
   ||   ||   || EUR millions 
   || Note || 2012 || 2011 
 Primary operating expenses: || 3.4.1 ||   ||   
   Direct centralised management ||   || 9 883 || 10 356 
   Indirect centralised management ||   || 4 151 || 4 119 
   Decentralised management ||   || 1 019 || 766 
   Shared management ||   || 106 378 || 104 067 
   Joint management ||   || 1 819 || 1 714 
   Total ||   || 123 250 || 121 022 
 Other operating expenses: || 3.4.2 ||   ||   
   Adjustments/provisions ||   || 427 || 251 
   Exchange losses ||   || 281 || 382 
   Other ||   || 675 || 2 123 
   Total ||   || 1 383 || 2 756 
 Total ||   || 124 633 || 123 778 
3.4.1     Primary
operating expenses
The EU's operating
expenditure covers the various headings of the financial framework and takes
different forms, depending on how the money is paid out and managed. The
majority of the expenditure falls under the heading “Shared Management”
involving the delegation of tasks to Member States, covering such areas as EAGF
spending and actions financed through the different Structural Actions (the regional development
fund, the social fund, the agricultural fund for rural development, the
cohesion fund and the fisheries fund).
The
main elements of the operating expenses for above cover the following areas:
agriculture and rural development (EUR 57 billion), regional development and
cohesion (EUR 39 billion), employment and social affairs (EUR 11 billion),
research and communication networks, content and technology (EUR 6 billion) and
external relations (EUR 3 billion).
3.4.2     Other
operating expenses
Exchange
losses, except on financial activities dealt with in note 3.6 below,
occur on the everyday activities and related transactions made in currencies
other than the Euro, as well as the year-end revaluation required to prepare
the accounts – they are both realised and unrealised. 
The 2011 heading other (under other
operating expenses) mainly comprised the correction of fines issued in previous years totalling EUR 1 471 million.
Research and
Development costs
Included under both
administrative expenses (note 3.3) and operating
expenses are research and non-capitalised development costs as follows:
   || EUR millions 
   || 2012 || 2011 
 Research costs || 331 || 327 
 Non-capitalised development costs || 76 || 145 
 Recognised as an expense || 407 || 472 
3.5       FINANCIAL REVENUE
   ||   || EUR millions 
   || 2012 || 2011 
 Dividend income || 12 || 5 
   ||   ||   
 Interest income: ||   ||   
   On pre-financing || 28 || 40 
   On late payments || 242 || 89 
   On available for sale financial assets || 100 || 113 
   On loans || 1 559 || 921 
   On cash and cash equivalents || 26 || 132 
   Other || 2 || 5 
   Total || 1 957 || 1 300 
 Other financial income: ||   ||   
   Realised gain on sale of financial assets || 18 || 3 
   Other || 160 || 178 
   Total || 178 || 181 
 Present value adjustments || 0 || 1 
   ||   ||   
 Exchange gains || 10 || 4 
   ||   ||   
 Total || 2 157 || 1 491 
The increase in financial revenue
is mainly explained by an increase of the interest income on loans. This
increase is in line with the increased balance of the EFSM loans (see notes 2.4.2 and 7).
As these loans are back-to-back loans, a corresponding increase was also noted
in interest expenses on loans (see note 3.6
below). The decrease in income on cash and cash equivalents can be
explained by significant diminution of market interest rates recorded in 2012.
The category which was impacted most is interest from provisionally cashed fines.
In this specific category, the combined effect of interest rate decrease and an
important number of fines accounts closed in 2012 led to the diminution of
interest income by approximately EUR 81 million.
3.6       FINANCIAL EXPENSES
   ||   || EUR millions 
   || 2012 || 2011 
 Interest expenses: ||   ||   
   Leasing || 88 || 91 
   On borrowings || 1 545 || 903 
   Other || 23 || 30 
   Total || 1 656 || 1 024 
 Other financial expenses: ||   ||   
   Adjustments to financial provisions || 75 || 74 
 Expenses relating to financial instruments managed by fiduciaries || 43 || 47 
   Impairment losses on available for sale financial assets || 8 || 12 
   Realised loss on sale of financial assets || 4 || 5 
   Other || 143 || 144 
   Total || 273 || 282 
 Exchange losses || 13 || 49 
   ||   ||   
 Total || 1 942 || 1 355 
3.7       SHARE
OF NET DEFICIT OF JOINT VENTURES AND ASSOCIATES
In accordance with the
equity method of accounting, the Commission includes in its statement of financial
performance its share of the net deficit of its joint
ventures and associates (see also notes 2.3.1 & 2.3.2).
3.8        REVENUE
FROM NON-EXCHANGE TRANSACTIONS
In 2012 EUR 137 023 million (2011: EUR 130 391 million) revenue from
non-exchange transactions have been recognised in the statement of
financial performance.
3.9       SEGMENT
REPORTING
The segment report
gives the split of the operating revenues and expenses by policy area, based on
the Activity Based Budget structure, within the Commission. These policy areas
can be grouped under three larger headings – Activities within the European
Union, Activities outside the European Union and Services & other.
“Activities within the
European Union” is the largest of these headings as it covers the many policy
areas within the European Union. “Activities outside the European Union”
concerns the policies operated outside the EU, such as trade and aid. “Services
& other” are the internal and horizontal activities necessary for the
functioning of the EU Institutions and bodies. Note that the information
relating to Agencies is included under the relevant policy area. Note also that
own resources and contributions are not split amongst the various activities as
these are calculated, collected and managed by central Commission services. 
   ||   ||   ||   ||   ||   || EUR millions 
   || Activities within the EU || Activities outside the EU || Services & Other || ECSC in Liquidation || Other Institutions || Consolidation eliminations || Total 
 Fines || 1 884 || - || - || - || - || - || 1 884 
 Agricultural levies || 87 || - || - || - || - || - || 87 
 Recovery of expenses || 1 444 || 59 || 1 || - || - || - || 1 504 
 Revenue from administrative operations || 99 || 1 || 992 || - || 664 || (465) || 1 291 
 Miscellaneous operating revenue || 2 692 || 90 || 440 || 7 || 8 || (1 177) || 2 060 
 Other operating revenue || 6 206 || 150 || 1 433 || 7 || 672 || (1 642) || 6 826 
   ||   ||   ||   ||   ||   ||   ||   
 Staff expenses || (2 256) || (318) || (1 352) || - || (1 802) || 20 || (5 708) 
 Intangible assets & PPE related expenses || (126) || 1 || (113) || - || (213) || - || (451) 
 Other administrative expenses || (1 003) || (311) || (880) || - || (1 594) || 627 || (3 161) 
 Administrative expenses || (3 385) || (628) || (2 345) || - || (3 609) || 647 || (9 320) 
   ||   ||   ||   ||   ||   ||   ||   
 Direct centralised management || (6 996) || (3 572) || (159) || - || - || 844 || (9 883) 
 Indirect centralised management || (3 762) || (422) || (34) || - || - || 67 || (4 151) 
 Decentralised management || (494) || (525) || - || - || - || - || (1 019) 
 Shared management || (106 464) || 83 || 3 || - || - || - || (106 378) 
 Joint management || (269) || (1 550) || - || - || - || - || (1 819) 
 Other operating expenses || (774) || (3) || (634) || (48) || (8) || 84 || (1 383) 
 Operating expenses || (118 759) || (5 989) || (824) || (48) || (8) || 995 || (124 633) 
 TOTAL OPERATING EXPENSES || (122 144) || (6 617) || (3 169) || (48) || (3 617) || 1 642 || (133 953) 
 Net operating expenses || (115 938) || (6 467) || (1 736) || (41) || (2 945) || 0 || (127 127) 
 Own resource and contributions revenue ||   ||   ||   ||   ||   ||   || 130 919 
 Surplus from operating activities ||   ||   ||   ||   ||   ||   || 3 792 
 Net financial revenue ||   ||   ||   ||   ||   ||   || 215 
 Movement in pension and other employee benefits liability ||   ||   ||   ||   || (8 846) 
 Share of net deficit of joint ventures and associates ||   ||   ||   ||   ||   || (490) 
 Economic result for the year ||   ||   ||   ||   ||   ||   || (5 329) 
   ||         SEGMENT REPORTING – ACTIVITIES WITHIN THE EU ||         EUR millions || 
   || Economic & Financial || Enterprise & Industry || Competition || Employment || Agriculture || Transport & Energy || Environment || Research || Information Society 
 Other operating revenue: ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Fines || 0 || 6 || 1 878 || 0 || 0 || 0 || 0 || 0 || 0 
 Agricultural levies || 0 || 0 || 0 || 0 || 87 || 0 || 0 || 0 || 0 
 Recovery of expenses || 0 || 1 || 0 || 48 || 1 025 || 10 || 3 || 21 || 18 
 Revenue from admin operations || 0 || 18 || 0 || 0 || 0 || 16 || 0 || 7 || 0 
 Miscellaneous operating revenue || 4 || 93 || 0 || 34 || 239 || 220 || 39 || 845 || 12 
 OTHER OPERATING REVENUE || 4 || 118 || 1 878 || 82 || 1 351 || 246 || 42 || 873 || 30 
 Administrative expenses: || (68) || (210) || (89) || (107) || (127) || (412) || (126) || (432) || (131) 
 Staff expenses || (60) || (147) || (83) || (82) || (107) || (281) || (88) || (236) || (107) 
 Intangible assets & PPE expenses || 0 || (8) || 0 || (1) || 0 || (15) || (1) || (15) || 0 
 Other administrative expenses || (8) || (55) || (6) || (24) || (20) || (116) || (37) || (181) || (24) 
 Operating expenses: || (40) || 394 || (80) || (10 873) || (56 842) || (2 372) || (329) || (4 365) || (1 312) 
 Centralised direct management || (40) || 211 || 0 || (169) || (48) || (1 061) || (307) || (2 906) || (1 285) 
 Centralised indirect management || 0 || 352 || 0 || (3) || 0 || (1 127) || (10) || (1 408) || (22) 
 Decentralised management || 0 || 0 || 0 || (61) || (38) || 0 || 0 || 0 || 0 
 Shared management || 0 || 0 || 0 || (10 618) || (56 655) || 0 || 0 || 0 || 0 
 Joint management || 0 || (130) || 0 || (7) || 0 || (123) || 0 || 0 || 0 
 Other operating expenses || 0 || (39) || (80) || (15) || (101) || (61) || (12) || (51) || (5) 
 TOTAL OPERATING EXPENSES || (108) || 184 || (169) || (10 980) || (56 969) || (2 784) || (455) || (4 797) || (1 443) 
 NET OPERATING EXPENSES || (104) || 302 || 1 709 || (10 898) || (55 618) || (2 538) || (413) || (3 924) || (1 413) 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   
   || Joint Research Centre || Fisheries || Internal Market || Regional Policy || Taxation & Customs || Education & Culture || Health & Consumer protection || Justice, Freedom & Security || Total Activities within the EU 
 Other operating revenue: ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Fines || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 1 884 
 Agricultural levies || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 87 
 Recovery of expenses || 0 || 6 || 0 || 303 || 0 || 6 || 2 || 1 || 1 444 
 Revenue from admin operations || 39 || 0 || 2 || 0 || 0 || 0 || 16 || 1 || 99 
 Miscellaneous operating revenue || 78 || 9 || 225 || (3) || 1 || 287 || 363 || 246 || 2 692 
 OTHER OPERATING REVENUE || 117 || 15 || 227 || 300 || 1 || 293 || 381 || 248 || 6 206 
 Administrative expenses: || (358) || (47) || (229) || (78) || (113) || (205) || (348) || (305) || (3 385) 
 Staff expenses || (249) || (39) || (150) || (66) || (43) || (110) || (234) || (174) || (2 256) 
 Intangible assets & PPE expenses || (27) || 0 || (8) || 0 || (10) || (1) || (25) || (15) || (126) 
 Other administrative expenses || (82) || (8) || (71) || (12) || (60) || (94) || (89) || (116) || (1 003) 
 Operating expenses: || (82) || (807) || (69) || (38 622) || (14) || (1 808) || (661) || (877) || (118 759) 
 Centralised direct management || (60) || (175) || (36) || (41) || (14) || (229) || (436) || (400) || (6 996) 
 Centralised indirect management || 0 || 0 || 0 || 0 || 0 || (1 478) || (66) || 0 || (3 762) 
 Decentralised management || 0 || 0 || 0 || (395) || 0 || 0 || 0 || 0 || (494) 
 Shared management || 0 || (629) || 0 || (38 186) || 0 || 0 || 0 || (376) || (106 464) 
 Joint management || 0 || 0 || 0 || 0 || 0 || (2) || (7) || 0 || (269) 
 Other operating expenses || (22) || (3) || (33) || 0 || 0 || (99) || (152) || (101) || (774) 
 TOTAL OPERATING EXPENSES || (440) || (854) || (298) || (38 700) || (127) || (2 013) || (1 009) || (1 182) || (122 144) 
 NET OPERATING EXPENSES || (323) || (839) || (71) || (38 400) || (126) || (1 720) || (628) || (934) || (115 938) 
   || SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU || EUR millions || 
   || External Relations || Trade || Development || Enlargement || Humanitarian Aid || Total Activities outside the EU || 
 Other operating revenue: ||   ||   ||   ||   ||   ||   || 
 Recovery of expenses || 34 || 0 || 2 || 24 || (1) || 59 || 
 Revenue from admin operations || 1 || 0 || 0 || 0 || 0 || 1 || 
 Miscellaneous operating revenue || 5 || 0 || 87 || (1) || (1) || 90 || 
 OTHER OPERATING REVENUE || 40 || 0 || 89 || 23 || (2) || 150 || 
 Administrative expenses: || (102) || (72) || (342) || (80) || (32) || (628) || 
 Staff expenses || (15) || (65) || (165) || (49) || (24) || (318) || 
 Intangible assets & PPE expenses || 1 || 0 || 0 || 0 || 0 || 1 || 
 Other administrative expenses || (88) || (7) || (177) || (31) || (8) || (311) || 
 Operating expenses: || (2 876) || (11) || (1 091) || (863) || (1 148) || (5 989) || 
 Direct centralised management || (1 729) || (6) || (782) || (485) || (570) || (3 572) || 
 Indirect centralised management || (350) || 0 || (19) || (53) || 0 || (422) || 
 Decentralised management || (218) || 0 || (37) || (270) || 0 || (525) || 
 Shared management || 83 || 0 || 0 || 0 || 0 || 83 || 
 Joint management || (662) || (5) || (252) || (54) || (577) || (1 550) || 
 Other operating expenses || 0 || 0 || (1) || (1) || (1) || (3) || 
 TOTAL OPERATING EXPENSES || (2 978) || (83) || (1 433) || (943) || (1 180) || (6 617) || 
 NET OPERATING EXPENSES || (2 938) || (83) || (1 344) || (920) || (1 182) || (6 467) || 
   ||   ||   || 
   || SEGMENT REPORTING – SERVICES & OTHER || EUR millions || 
   || Press & Communication || Anti-Fraud Office || Co-ordination || Personnel & Admin || Eurostat || Budget || Audit || Languages || Other || Total Services & Other 
 Other operating revenue: ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Recovery of expenses || 1 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 1 
 Revenue from admin operations || 0 || 7 || 2 || 829 || 0 || 56 || 0 || 98 || 0 || 992 
 Miscellaneous operating revenue || (2) || 5 || 1 || 53 || 0 || 9 || 0 || 47 || 327 || 440 
 OTHER OPERATING REVENUE || (1) || 12 || 3 || 882 || 0 || 65 || 0 || 145 || 327 || 1 433 
 Administrative expenses: || (124) || (51) || (184) || (1 424) || (91) || (58) || (11) || (441) || 39 || (2 345) 
 Staff expenses || (79) || (38) || (159) || (632) || (70) || (45) || (10) || (358) || 39 || (1 352) 
 Intangible assets & PPE expenses || (2) || (1) || 0 || (109) || 0 || 0 || 0 || (1) || 0 || (113) 
 Other administrative expenses || (43) || (12) || (25) || (683) || (21) || (13) || (1) || (82) || 0 || (880) 
 Operating expenses: || (124) || (22) || (2) || (14) || (32) || (341) || 0 || (16) || (273) || (824) 
 Direct centralised management || (90) || (22) || 0 || (12) || (32) || (3) || 0 || 0 || 0 || (159) 
 Indirect centralised management || (34) || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || (34) 
 Shared management || 0 || 0 || 0 || 0 || 0 || 3 || 0 || 0 || 0 || 3 
 Other operating expenses || 0 || 0 || (2) || (2) || 0 || (341) || 0 || (16) || (273) || (634) 
 TOTAL OPERATING EXPENSES || (248) || (73) || (186) || (1 438) || (123) || (399) || (11) || (457) || (234) || (3 169) 
 NET OPERATING EXPENSES || (249) || (61) || (183) || (556) || (123) || (334) || (11) || (312) || 93 || (1 736) 
              4. NOTES TO THE CASHFLOW STATEMENT
4.1       PURPOSE AND PREPARATION OF THE CASHFLOW
STATEMENT
Cash flow information
is used to provide a basis for assessing the ability of the EU to generate cash
and cash equivalents, and its needs to utilise those cash flows.
The cashflow statement is
prepared using the indirect method. This means that the net surplus or deficit
for the financial year is adjusted for the effects of transactions of a
non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments, and items of revenue or expense associated with investing
cash flows.
Cash flows arising from
transactions in a foreign currency are recorded in the EU’s reporting currency
(Euro), by applying to the foreign currency amount the exchange rate between
the euro and the foreign currency at the date of the cash flow.
The cashflow statement presented
reports cash flows during the period classified by operating and investing
activities (the EU does not have financing activities).
4.2       OPERATING ACTIVITIES
Operating activities
are the activities of the EU that are not investing activities. These are the
majority of the activities performed. Loans granted to beneficiaries (and the
related borrowings, when applicable) are not considered as investing (or
financing) activities as they are part of the general objectives and thus daily
operations of the EU. Operating activities also include investments such as
EIF, EBRD and venture capital funds. Indeed, the objective of these activities
is to participate in the achievement of policy targeted outcomes.
4.3       INVESTING ACTIVITIES
Investing activities
are the acquisition and disposal of intangible assets and property, plant and
equipment and of other investments
which are not included in cash equivalents. Investing activities do not include
loans granted to beneficiaries. The objective is to show the real investments
made by the EU. 
              5. CONTINGENT ASSETS & LIABILITIES
AND OTHER SIGNIFICANT DISCLOSURES
5.1      CONTINGENT ASSETS
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Guarantees received: ||   ||   
    Performance guarantees || 337 || 300 
    Other guarantees || 43 || 34 
 Other contingent assets || 14 || 19 
 Total || 394 || 353 
Performance
guarantees are requested to ensure that beneficiaries of EU funding meet the
obligations of their contracts with the EU. 
5.2      CONTINGENT LIABILITIES
   ||   ||   || EUR millions 
   || Note || 31.12.2012 || 31.12.2011 
 Guarantees given || 5.2.1 || 22 317 || 24 394 
 Fines || 5.2.2 || 6 378 || 8 951 
 EAGF, rural development and pre-accession || 5.2.3 || 1 188 || 2 345 
 Cohesion policy || 5.2.4 || 546 || 318 
 Legal cases and other disputes || 5.2.5 || 91 || 251 
 Other contingent liabilities ||   || 1 || 2 
 Total ||   || 30 521 || 36 261 
All
contingent liabilities, except those relating to fines, would be financed,
should they fall due, by the EU budget in the years to come.
5.2.1     Guarantees
given
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 On loans granted by the EIB from its own resources: ||   ||   
   65% guarantee || 18 683 || 20 362 
   70% guarantee || 1 654 || 1 992 
   75% guarantee || 383 || 534 
   100% guarantee || 594 || 724 
     Total || 21 314 || 23 612 
 Other guarantees given || 1 003 || 782 
   ||   ||   
 Total || 22 317 || 24 394 
The EU budget guarantees loans signed and granted by
the EIB from its own resources to third countries at 31 December 2012
(including loans granted to Member States before accession). However, the EU’s
guarantee is limited to a percentage of the ceiling of the credit lines authorised:
65% (for the mandate 2000-2007), 70%, 75% or 100%. For the mandate 2007-2013,
the EU’s guarantee is limited to 65% of the outstanding balances and not on the
credit lines authorised. Where the ceiling is not reached, the EU guarantee
covers the full amount. At 31 December 2012 the amount outstanding totalled EUR 21 314 million and this, therefore, is the maximum
exposure faced by the EU.
The above 2011 amount for the 65% guarantee does not
take the difference in calculation with regard to the 2000-2007 and 2007-2013
mandates into account. Had the 2011 amount been calculated based on this
differentiation the amount to be disclosed would have been EUR 17 423 million.
Other
guarantees given relate mainly to the Risk-Sharing Finance Facility (EUR 948 million)
and the Loan Guarantee Instrument for TEN-T Projects (EUR 39 million). See for
more information on these facilities note 2.4.
5.2.2     Fines
These amounts concern
fines imposed by the Commission for infringement of competition rules that have
been provisionally paid and where either an appeal has been lodged or where it
is unknown if an appeal will be made. The contingent liability will be
maintained until a decision by the Court of Justice on the case is final. Interest earned on
provisional payments is included in the economic result of the year and also as
a contingent liability to reflect the uncertainty of the Commission’s title to
these amounts.
5.2.3     EAGF,
rural development and pre-accession
These are contingent
liabilities towards the Member States connected with the EAGF conformity
decisions, rural development and pre-accession financial corrections pending
judgement of the Court of Justice. The determination of the final amount of the
liability and the year in which the effect of successful appeals will be
charged to the budget will depend on the length of the procedure before the
Court.
5.2.4     Cohesion
policy
These are contingent
liabilities towards the Member States in conjunction with actions under
cohesion policy awaiting the oral hearing date or pending judgement of the
Court of Justice.
5.2.5     Legal
cases and other disputes
This heading relates to actions for
damages currently being brought against the Commission and other EU bodies,
other legal disputes and the estimated legal costs. It should be noted that in
an action for damages under Article 288 EC the applicant must demonstrate a
sufficiently serious breach by the institution of a rule of law intended to
confer rights on individuals, real harm suffered by the applicant, and a direct
causal link between the unlawful act and the harm.
5.3      OTHER SIGNIFICANT DISCLOSURES
5.3.1     Outstanding
commitments not yet expensed
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Outstanding commitments not yet expensed || 175 853 || 165 236 
The amount disclosed above is the
budgetary RAL ("Reste à Liquider") less related amounts that have
been included as expenses in the 2012 statement of financial performance. The
budgetary RAL is an amount representing the open commitments for which payments
and/or de-commitments have not yet been made. This is the normal consequence of
the existence of multi-annual programmes. At 31 December
2012 the budgetary RAL totalled EUR 217 810 million
(2011: EUR 207 443 million). 
5.3.2     SIGNIFICANT
LEGAL COMMITMENTS
   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Structural Actions || 71 775 || 142 916 
 Protocol with Mediterranean countries || 264 || 264 
 Fisheries agreements || 173 || 37 
 Galileo programme || 143 || 320 
 GMES programme || 233 || 400 
 TEN-T || 1 331 || 3 416 
 Other contractual commitments || 3 884 || 4 493 
 Total || 77 803 || 151 846 
These commitments originated
because the EU entered into long-term legal commitments in respect of amounts
that were not yet covered by commitment appropriations in the budget. This can
relate to multi-annual programmes such as Structural Actions or amounts that
the EU is committed to pay in the future under administrative contracts
existing at the balance sheet date (e.g. relating to the provision of services
such as security, cleaning, etc, but also contractual commitments concerning
specific projects such as building works). 
Structural Actions
The table below shows a
comparison between the legal commitments for which budget commitments have not
yet been made and the maximum commitments in relation to the amounts foreseen
in the financial framework 2007-2013.
   ||   ||   ||   ||   || EUR millions 
   || Financial perspective amounts 2007-2013 (A) || Legal commitments concluded (B) || Budget commitments 2007-2011 (C) || Legal commitments less budget commitments (=B-C) || Maximum commitment (=A-C) 
 Structural funds || 347 552 || 347 521 || 293 050 || 54 471 || 54 502 
 Natural Resources || 100 549 || 100 539 || 85 058 || 15 481 || 15 491 
 Instrument for Pre-Accession Assistance || 11 255 || 9 895 || 9 473 || 422 || 1 782 
 Total || 459 356 || 457 955 || 387 581 || 70 374 || 71 775 
Protocols with Mediterranean
countries
These commitments relate to financial protocols with
Mediterranean non-member countries. The amount included here is the difference
between the total amount of the protocols signed and the amount of the budget
commitments entered in the accounts. These protocols are international treaties
that cannot be wound up without the agreement of both parties, although the
winding-up process is on-going.
Fisheries agreements
These are commitments
entered into with third countries for operations under international fisheries
agreements.
Galileo programme
These are amounts are
committed to the Galileo programme developing a European Global Navigation
Satellite System – see also note 2.2.
GMES programme
The Commission has
entered into a contract with the ESA for the period from 2008 to 2013 for the
implementation of the space component of Global Monitoring for Environment and
Security (GMES). The total indicative amount for that period is EUR 728
million. 
TEN-T commitments
This amount relates to
grants in the field of the trans-European transport network (TEN-T) for the
period 2007 - 2013. The programme applies to projects identified for the
development of a trans-European transport network to support both
infrastructure projects and research and innovation projects to foster the integration
of new technologies and innovative processes on the deployment of new transport
infrastructure. The total indicative amount for this programme is EUR 7 900
million.
The decrease in legal
commitments relating to TEN-T is the combined effect of reduced legal
commitments following amendment decisions and increased budget commitments.
Other contractual
commitments
The amounts included
under this disclosure correspond to amounts committed to be paid during the
term of the contracts. The largest amounts included here relate to procurement arrangements
of the Fusion for Energy Agency in the context of ITER project and to building
contracts of the European Parliament.
              6. PROTECTION OF THE EU BUDGET
6.1      BACKGROUND
An important consideration in
implementing the EU budget is the need to ensure the proper prevention or
detection and subsequent correction of errors, irregularities and fraud. The
objective of this note is to provide: (1) an overview of the preventive and
corrective mechanisms foreseen in the applicable legislation which detail the
process of identifying and then dealing with errors, irregularities and fraud
detected by EU bodies and by Member States, and (2) a best estimate of the
total amounts concerned so as to illustrate in real terms how the EU budget is
protected. 
Information is not only presented
below concerning actions made at the EU level, but is also given on the
corrections effected by Member States under shared management following their
own controls and audits (for the programming period 2007-2013 only, since for
previous programming periods, data presented by Member States is incomplete
and/or unreliable). These corrections are not recorded in the Commission's
accounting system because Member States can reuse, in most cases, these amounts
for other eligible expenditure. Member States figures are reported in table 6.7 below.
Further details on the amounts
presented below and the processes involved can be found in a specific communication
prepared by the Commission and sent to the Discharge Authority and Court of
Auditors every September as from 2013 – this is available on the DG Budget
Europa website.
6.2      PREVENTIVE
MECHANISMS OF THE EUROPEAN COMMISSION
In direct management, preventive
actions include checks made by the responsible services on eligibility of
expenditure being claimed by beneficiaries. These ex-ante controls are embedded
in the programmes’ management processes and are intended to provide reasonable
assurance on the legality and regularity of expenditure being paid. The
Commission services can also provide guidance, particularly on contractual
issues, with the aim of ensuring a sound and efficient management of funding
and therefore a lower risk of irregularities.
Under the shared management mode
(i.e. agricultural and cohesion policy expenditure), Member States are
primarily responsible throughout the expenditure life cycle for ensuring that
expenditure paid out from the EU budget is legal and regular. Preventive
mechanisms also exist at the level of the Commission in its role of supervising
body. The Commission may:
- interrupt the payment
deadline for a maximum period of 6 months for the 2007-2013 programmes if:
(a) There is evidence to
suggest a significant deficiency in the functioning of the management and
control systems of the Member State concerned; or
(b) The Commission
services have to carry out additional verifications following information that
expenditure in a certified statement of expenditure is linked to a serious
irregularity which has not been corrected.
- suspend all or part of an
interim payment to a Member State for the 2007-2013 programmes in the following
three cases:
(a) Where there is
evidence of serious deficiency in the management and control system of the
programme and the Member State has not taken the necessary corrective measures;
or
(b) Where expenditure in
a certified statement of expenditure is linked to a serious irregularity which
has not been corrected; or
(c) If there has been a
serious breach by a Member State of its management and control obligations.
Where the required measures are not
taken by the Member State, the Commission may decide to impose a financial
correction. Suspensions and interruptions figures are presented in note 6.4.1 below.
6.3      CORRECTIVE
MECHANISMS OF THE EUROPEAN COMMISSION
6.3.1.
Financial corrections 
Under shared management, Member
States are primarily responsible for preventing, detecting and correcting
errors, irregularities or frauds committed by beneficiaries in the first
instance, while the Commission ensures an overall supervisory role. Where
serious failings in the management and control systems of Member States have
led or could lead to individual or systemic errors, irregularities or fraud,
the Commission can apply financial corrections. The processing of financial
corrections follows these three main steps:
(1) Financial corrections in
progress: these corrections are subject to change since they are not yet
formally accepted by the Member States, for example in the case of an audit
which has been finalised, but where the Commission is still in the
contradictory phase with the Member State concerned. 
(2) Financial correction confirmed/decided:
these
amounts are final, meaning that they have been either confirmed (i.e. agreed)
by the Member State concerned or decided via a Commission decision. They are
reported in tables 6.4.2.1 below.
(3) Financial corrections implemented:
These
amounts represent the final step of the process whereby the observed situation
of undue expenditure is definitively corrected. Several correction mechanisms
are foreseen in the sector-based regulatory frameworks. These figures are
reported in tables 6.4.2.2 and 6.4.3.1 below.
6.3.2     Recoveries

Under direct management,
and in accordance with the Financial Regulation, recovery orders should be
established by the authorising officer for amounts unduly paid. Recoveries are
then implemented by direct bank transfer from the debtor (e.g. Member State) or
by offsetting from other amounts that the Commission owes to the debtor. The Financial
Regulation foresees additional procedures to ensure the collection of recovery
orders overdue, which are the object of a specific follow up by the Accounting
Officer of the Commission.
Under shared management in the area
of Agriculture, Member States are obliged to identify errors and irregularities
and to recover amounts unduly paid in accordance with national rules and
procedures. For the EAGF, amounts recovered from the beneficiaries are credited
to the Commission, after deduction applied by Member States of 20% (on
average), who book them as revenue. For EAFRD, recoveries are deducted from the
next payment claim before it is sent to the Commission's services, and
therefore the relevant amount can be reused for the programme. If a Member
State does not pursue the recovery or is not diligent in its actions, the
Commission may decide to intervene and to impose a financial correction on the
Member State concerned. In the area of Cohesion Policy, Member States (and not
the Commission) are primarily responsible for recovering from beneficiaries,
amounts unduly paid increased, where applicable, by late payment interest. The
amounts recovered by the Member States are disclosed in this note for
information purpose, in addition to financial corrections imposed by the
Commission. For the 2007-2013 period, Member States are legally required to
provide the Commission with clear and structured data on amounts withdrawn from
co-financing before the national recovery process is finalised and the amounts
effectively recovered from beneficiaries at national level.
6.3.3     Recovery
of unused pre-financing amounts 
In almost all areas, the EU makes
pre-financing, or advance payments to beneficiaries. As explained under note 1.5.7, these are payments intended to provide
the beneficiary with a cash advance or float. When a beneficiary has not used
(spent) the totality of a pre-financing amount received from the EU, the
Commission services issue a recovery order to ensure the return of the monies
to the EU budget. This procedure represents an important step in the control
system of the EU to ensure that no excess money is kept by the beneficiary
without proper expense justification, thus contributing to the protection of
the EU budget. These recoveries are presented in table 6.5 below.
Recoveries of unused
pre-financing amounts should not be confused with irregular expenditure
recovered. Where Commission services identify and recover such expenditure in
relation to pre-financing amounts paid out, these are included in the normal
financial correction or recovery processes described under 6.3.1 and 6.3.2
above.
6.3.4     Own
resource revenue - recoveries 
Regarding own resource revenues,
which are the major fund source of the EU budget, recoveries concern the
follow-up of: European Commission's inspection reports, European Court of
Auditor's audits, financial responsibility cases resulting from Member States'
administrative errors or lack of diligence in their recovery action,
infringement proceedings, European Court of Justice's rulings and also amounts
resulting from spontaneous payments from Member States and interest on late
payments related to own resources. These amounts are reported in table 6.6 below.
6.4    FINANCIAL IMPACT OF PREVENTIVE AND CORRECTIVE
MECHANISMS
6.4.1 Interruptions
and suspensions in 2012
Interruptions:
The tables below present for the
ERDF, the Cohesion Fund, the ESF and the EFF, a view on the evolution of the
interruption cases both in number and in amount. The opening balance includes
all the cases still open at end 2011, irrespective of the year when the
interruption was notified to the Member State (for this reason certain figures
are not directly comparable with those disclosed in the 2011 annual accounts).
The new cases only refer to the interruptions notified in the year 2012. The
closed cases represent the cases for which the payment of cost claims resumed
in 2012, irrespective of the year when the interruption started. The cases
still open at end 2012 represent the interruptions that remain active at 31
December 2012, i.e. the payment of cost claims is still interrupted pending
corrective measures to be taken by the Member State concerned.
 EUR millions 
 2007-2013 programming period || ERDF / Cohesion Fund ||   
 Total open cases at 31.12.2011 || New cases 2012 || Closed cases during 2012 || Total open cases at 31.12.2012 
 Member State || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount 
 Germany || 3  || 17  ||  2 ||  163 ||   ||   ||  5 ||  180 
 Spain ||   ||   ||  49 || 1 495 ||  41 ||  1 319 ||  8 || 176 
 France ||   ||   ||  6 || 51 || 5 || 24 ||  1 ||  27 
 Italy* ||  10 ||  265 ||  20 ||  1 122 ||  19 || 860 ||  11 || 526 
 Latvia ||   ||   ||  5 ||  94 || 5 || 94 ||  0 ||  0 
 Lithuania ||   ||   ||  4 ||  164 || 4 || 164 ||  0 ||  0 
 Hungary ||   ||   || 3 || 55 ||   ||   ||  3 || 55 
 Poland ||   ||   || 5 || 605 ||   ||   ||  5 || 605 
 Romania ||   ||   ||  1 ||  41 ||   ||   ||  1 ||  41 
 Slovenia ||   ||   || 1 ||  6 ||  1 ||  6 ||  0 ||  0 
 Slovakia ||  2 ||  71 ||   ||   || 2 ||  71 ||  0 ||  0 
 United Kingdom ||   ||   ||  1 ||  22 ||   ||   ||  1 ||  22 
 Cross-border ||   ||   || 11 ||  59 ||  8 ||  52 ||  3 ||  6 
 Total ||  15 || 353 ||  108 ||  3 878 ||  85 ||  2 592 ||  38 || 1 639 
* The opening balance includes an
adjustment of figures reported in 2011.
In addition to these interruption
procedures, 119 warning letters (in cases where no payment claim was pending)
have been sent in 2012 for ERDF, contributing to the further prevention of
irregular amounts.
 2007-2013 programming period || ESF ||   
 Total open cases at 31.12.2011 || New cases 2012 || Closed cases during 2012 || Total open cases at 31.12.2012 
 Member State || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount 
 Czech Republic ||   ||   || 1 || 47 ||   ||   ||  1 || 47 
 Germany ||   ||   ||  5 ||  165 || 4 || 145 ||  1 ||  19 
 Spain || 2 || 10 ||  8 ||  159 ||  9 ||  160 ||  1 || 9 
 France ||  2 ||  25 ||  9 ||  142 || 4 || 91 ||  7 ||  76 
 Italy ||  4 ||  53 ||  7 ||  207 || 6 || 231 ||  5 || 30 
 Latvia ||   ||   ||  2 ||  26 || 2 || 26 ||  0 ||  0 
 Lithuania ||   ||   ||  1 ||  1 || 1 || 1 ||  0 ||  0 
 Romania ||   ||   ||  1 ||  21 || 1 ||  21 ||  0 ||  0 
 Slovakia ||   ||   ||  1 ||  45 ||  1 || 45 ||  0 ||  0 
 United Kingdom || 2 ||  234 ||  2 ||  69 ||  4 || 303 ||  0 ||  0 
 Total ||  10 || 323 ||  37 ||  881 ||  32 ||  1 023 ||  15 || 181 
 2007-2013 programming period || EFF ||   
 Total open cases at 31.12.2011 || New cases 2012 || Closed cases during 2012 || Total open cases at 31.12.2012 
 Member State || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount || Number of cases || Amount 
 Czech Republic ||   ||   || 1 ||  1 ||  1 ||  1 ||  0 ||  0 
 Denmark || 1 || 0 ||   ||   || 1 || 0 || 0 || 0 
 Germany ||  2 || 1 ||   ||   ||   ||   ||  2 ||  1 
 Estonia || 1 || 0 || 3 || 0 ||   ||   || 4 || 0 
 Spain ||  1 || 62 ||  2 ||  32 ||  2 ||  84 ||  1 || 9 
 France ||  2 ||  3 ||   ||   ||   ||   ||  2 ||  3 
 Italy ||   ||   ||  6 ||  38 ||   ||   ||  6 || 38 
 Latvia ||   ||   ||  1 ||  0 ||   ||   ||  1 ||  0 
 Netherlands ||   ||   || 3 ||  8 ||  3 ||  8 ||  0 ||  0 
 Poland ||   ||   || 1 || 2 ||  1 ||  2 ||  0 ||  0 
 Portugal ||   ||   ||  3 ||  16 ||  2 ||  12 ||  1 ||  4 
 Romania ||   ||   ||  5 ||  35 ||   ||   ||  5 ||  35 
 Slovakia ||   ||   ||  2 ||  2 ||   ||   ||  2 ||  2 
 Finland ||  2 ||  0 ||  3 ||  0 ||  5 ||  1 ||  0 ||  0 
 Sweden || 1 || 0 || 2 || 6 ||   ||   || 3 || 6 
 United Kingdom || 1 ||  34 ||  4 ||  7 ||  2 ||  33 ||  3 ||  8 
 Total ||  11 || 100 ||  36 ||  149 ||  17 ||  141 ||  30 || 108 
Suspensions:
Concerning ERDF and the Cohesion
Fund, suspension decisions were taken for 2 programmes in Germany and in
Italy. Both suspensions were still effective at 31 December 2012. Concerning ESF,
2 suspension decisions were adopted in 2012 and concerned the Czech Republic
and Slovakia. Suspension was still on-going for Czech Republic at 31 December
2012. There were no suspension decisions taken in 2012 for EFF. 
6.4.2     Financial
corrections and recoveries made in 2012
6.4.2.1 Financial
corrections and recoveries confirmed/decided in 2012
 EUR millions 
   || Financial || Recoveries || 2012 || 2011 
   || Corrections || Total || Total 
 Agriculture: ||   ||   ||   ||   
 EAGF || 475 || 162 || 638 || 839 
 Rural Development || 76 || 145 || 221 || 228 
 Cohesion Policy: ||   ||   ||   ||   
 ERDF || 958 || N/A || 958 || 424 
 Cohesion Fund || 203 || N/A || 203 || 17 
 ESF || 425 || N/A || 425 || 227 
 FIFG/EFF || 2 || N/A || 2 || 3 
 EAGGF Guidance || 31 || 3 || 34 || 1 
 Other || N/A || 19 || 19 || 50 
 Internal policy areas || 1 || 252 || 253 || 270 
 External policy areas || N/A || 107 || 107 || 107 
 Administration* || N/A || 7 || 7 || 8 
 Total decided/confirmed in 2012 || 2 172 ||  695 || 2 867 ||   
 Total decided/confirmed in 2011 || 1 406 || 768 ||   || 2 174 
*
Figure for Administration was not reported before.
6.4.2.2 Financial
corrections and recoveries implemented in 2012
 EUR millions 
   || Financial || Recoveries || 2012 || 2011 
   || Corrections || Total || Total 
 Agriculture: ||   ||   ||   ||   
 EAGF || 610 || 161 || 771 || 621 
 Rural Development || 59 || 166 || 225 || 201 
 Cohesion Policy: ||   ||   ||   ||   
 ERDF || 2 416 || N/A || 2 416 || 419 
 Cohesion Fund || 207 || N/A || 207 || 115 
 ESF || 430 || N/A || 430 || 178 
 FIFG/EFF || 1 || N/A || 1 || (90) 
 EAGGF Guidance || 17 || 3 || 20 || 1 
 Other || N/A || 11 || 11 || 48 
 Internal policy areas || 1 || 229 || 230 || 268 
 External policy areas || N/A || 99 || 99 || 77 
 Administration* || N/A || 9 || 9 || 2 
 Total implemented in 2012 || 3 742 || 678 || 4 419 ||   
 Total implemented in 2011 || 1 106 || 733 ||   || 1 840 
*
Figure for Administration was not reported before.
6.4.2.3 Break-down per Member State of 2012 financial
corrections implemented under shared management
 EUR millions 
 Member State || EAGF || Rural Development || ERDF || Cohesion Fund || ESF || Other || Total 2012 || Total 2011 
 Belgium ||  0 ||  3 ||  0 ||  - ||  11 ||  0 ||  14 ||  1 
 Bulgaria ||  15 ||  7 ||  0 ||  6 ||  1 ||  - ||  30 ||  25 
 Czech Republic ||  0 ||  - ||  116 ||  8 ||  - ||  0 ||  125 ||  6 
 Denmark ||  22 ||  - ||  0 ||  - || - || - ||  22 ||  0 
 Germany || (16) ||  3 ||  23 ||  - ||  0 ||  0 ||  10 ||  1 
 Estonia ||  0 ||  1 ||  0 ||  0 ||  0 || - ||  1 ||  0 
 Ireland || (1) ||  10 ||  - || - || - || - ||  9 ||  2 
 Greece ||  85 ||  5 ||  0 ||  13 ||  159 ||  0 ||  262 ||  448 
 Spain ||  47 ||  2 || 1 952 ||  81 ||  84 ||  7 || 2 172 ||  159 
 France ||  64 ||  1 ||  20 ||  - ||  37 ||  2 ||  123 ||  33 
 Italy ||  209 ||  0 ||  57 ||  - ||  3 ||  7 ||  275 ||  50 
 Cyprus ||  8 ||  0 ||  - ||  - ||  - ||  0 ||  8 ||  3 
 Latvia ||  - ||  - ||  1 ||  1 ||  9 ||  0 ||  12 ||  0 
 Lithuania ||  3 ||  4 ||  3 ||  1 ||  0 ||  0 ||  10 ||  0 
 Luxembourg ||  0 ||  - ||  0 ||  - ||  - ||  - ||  0 ||  0 
 Hungary ||  6 ||  0 ||  0 ||  - ||  - ||  0 ||  6 ||  41 
 Malta ||  0 ||  - || - ||  - || - ||  - ||  0 ||  0 
 Netherlands ||  17 ||  2 ||  0 ||  - ||  - ||  0 ||  20 ||  53 
 Austria ||  1 ||  - || - || - || - ||  0 ||  1 ||  0 
 Poland ||  12 ||  2 ||  45 ||  79 ||  23 ||  0 ||  162 ||  148 
 Portugal ||  15 ||  1 ||  117 ||  0 ||  - ||  0 ||  134 ||  26 
 Romania ||  24 ||  12 ||  22 ||  - ||  81 ||  - ||  139 ||  53 
 Slovenia ||  0 ||  0 || -  || - || - ||  0 ||  0 ||  4 
 Slovakia ||  0 ||  - ||  29 ||  17 ||  11 ||  - ||  57 ||  5 
 Finland ||  1 ||  0 ||  0 ||  - ||  - ||  0 ||  1 ||  0 
 Sweden ||  72 ||  2 ||  0 ||  - ||  0 ||  - ||  74 ||  3 
 United Kingdom ||  27 ||  4 ||  4 ||  - ||  12 ||  2 ||  50 ||  44 
 Interreg/Cross-border ||  - ||  - ||  24 ||  - ||  - ||  - ||  24 ||  1 
 TOTAL IMPLEMENTED ||  610 ||  59 || 2 416 ||  207 ||  430 ||  19 || 3 742 || 1 106 
6.4.2.4 Explanation
of financial corrections and recoveries movements in 2012
Agriculture and Rural Development: The financial
corrections confirmed/decided are mainly related to Commission conformity and
clearance decisions, arising as a result of audits performed by the Commission.
The amount effectively implemented is different from the amount decided due to
a delay in cashing. For recoveries, amounts are quite stable in comparison to
last year figures.
Cohesion Policy:
ERDF and the Cohesion Fund: Financial correction
amounts both confirmed/decided and implemented have significantly increased
compared to last year:
Amounts decided/confirmed:
- Period 2007-2013: more than half of the
EUR 1 161 million financial corrections confirmed/decided in 2012 (EUR 631
million) concern the current programming period 2007-2013 as a result of
stricter supervision by the Commission and a growing number of audits completed
at this stage of implementation of the programmes. The amount of corrections decided/confirmed in 2012
related to the programming period 2007-2013 is mainly explained by corrections
concerning Spain (EUR 267 million), the Czech Republic (EUR 111 million),
Greece (EUR 82 million) and Poland (EUR 77 million). These amounts do not include corrections to expenditure
declared by beneficiaries at Member State level and therefore not certified to
the Commission as a result of its requested action plans. 
- Period 2000-2006: The remaining amount
(EUR 531 million) covers corrections related to the on-going closure process of
the programming period 2000-2006. The corrections at closure result from the
analysis of winding-up declarations, or the extrapolation of the residual error
rate. The main corrections concern Spain (EUR 316 million), Italy (EUR 65
million) and Portugal (EUR 53 million). These corrections should continue in
2013 as the result of the finalisation of the closure exercise, with lower
amounts though. 
Amounts implemented: 
The amounts reported this year
concern the 2000-2006 period almost exclusively and financial corrections that
were decided/accepted in previous years. A major correction for Spain (EUR 1.8
billion) has been reported as implemented following the completion of the
verification of all closure documents, the full validation of the cost claims
submitted by the Member State authorities from which the corrections were
deducted, as well as the processing of the partial payment of the remaining
balance to Spain. It should be noted that due to the lack of payment appropriations
in the 2012 budget, at the end of the year (following the rejection by the
budget authority of the proposal for an amending budget with higher payment
appropriations), the Commission services could not make a full payment of the
balance due to Spain.
ESF: 
- 2000-2006: most of the
financial corrections reported relate to either the extrapolation of the
residual error rate at closure (following the analysis of the winding-up
declarations), or net corrections at closure. The closure audits are still on-going.

- 2007-2013: the amounts
reported relate to irregular amounts deducted from interim payment claims
submitted by Member States during the life cycle of the programme. The increase
in the amounts reported result from the joint audit strategy developed for this
programming period.
6.4.3     Cumulative
figures for financial corrections and recoveries implemented
6.4.3.1 Financial
corrections implemented – cumulative figures 
Information is given below showing
the cumulative financial corrections reported by programming period: 
   ||   ||   ||           EUR millions 
  Financial corrections || Programming Period || Cumulated EAGF decisions  || Total as at end 2012 || % || Total not yet implemented As at end 2012 || Implemented at end 2011 
 1994-1999 Period || 2000-2006 Period || 2007-2013 Period || Implemented / Decided-confirmed 
 Agriculture: || - ||  93 ||  81 || 7 728 ||  7 902 || 92.7% || 623 ||  7 139 
 EAGF || - || - || - || 7 728 || 7 728 || 93.3% || 558 || 7 024 
 Rural Development* || - ||  93 ||  81 || - ||  174 || 72.8% || 65 ||  115 
 Cohesion Policy: || 2 535 ||  6 359 ||  779 || - ||  9 673 || 89.7% || 1 114 ||   
 ERDF || 1 764 || 4 626 ||  154 || - || 6 544 || 89.6% || 761 || 4 128 
 Cohesion Fund ||  264 ||  464 ||  87 || - ||  815 || 82.8% || 169 ||  608 
 ESF ||  407 || 1 206 ||  538 || - || 2 150 || 96.7% || 74 || 1 720 
 FIFG/EFF ||  100 ||  5 ||  0 || - ||  105 || 52.2% || 96 ||  104 
 EAGGF Guidance* ||  0 ||  58 ||  - || - ||  58 || 80.6% || 14 ||  41 
 Other || - || - || - || 2 ||  2 || 100,0% || - ||  0 
   ||   ||   ||   ||   ||   ||   ||   ||   
 Total || 2 535 || 6 452 ||  861 || 7 730 || 17 577 || 91,0% || 1 737 || 13 741 
* Certain amounts previously
disclosed as financial corrections are now reported under recoveries.
The amounts of financial
corrections disclosed in this table for Agriculture represent gross amounts
related to conformity clearance decisions. However the amounts disclosed in
note 6.4.2.2 also take into account
financial clearance decisions.
Concerning EAGF, the
cumulated amount implemented of EUR 7 728 million covers all corrections made
as from when the first decision was made in 1999. For Rural Development,
the cumulated amount of EUR 174 million covers all corrections and recovery of
irregularities as from 2007. It is to be noted that in some cases the date of
implementation was deferred by several years, and some decisions are also
reimbursed in deferred annual instalments. This is the case for Member States
subject to financial assistance in accordance with the European Financial
Stability Framework Agreement signed on 7 June 2010. As a consequence, there is
an increasing discrepancy between the cumulative amounts decided and
implemented.
Concerning Cohesion policy: 
Period 2000-2006: The increase of the
implementation rate for ERDF for the programming period 2000-2006 in 2012 (from
53% in 2011 to 92% in 2012) is explained by the sending to Member States of all
but seven ERDF closure letters covering operational programmes by end 2012,
followed by the authorisation of partial ERDF 2000-2006 final payment claims
(within the limits of available credits). This high implementation rate at end
2012 also applies to ESF. For FIFG, closure documents and final
payment claims are still being processed by the Commission services, which
explains the low implementation rate for this programming period.
Period 2007-2013: As a result of
stricter supervision by the Commission, a growing number of audits are
completed at this stage of implementation of the programmes. The corrections
confirmed/decided or implemented will continue to increase in the coming years,
as a result of the Commission supervisory role and EU audits.
Included in the above table are
financial corrections that are being challenged by certain Member States
(noting that past experience has shown that the Commission has very rarely had
to repay amounts following such cases). For more details, see note 5.2.4.
6.4.3.2 Recoveries
implemented – cumulative figures 
For recoveries, reliable cumulative
information is only available since 2008 when a specific functionality was
introduced into the Commission's accounting system to better track and report
such recoveries. The information below shows the breakdown of recoveries made
per year:
 EUR millions 
   ||   || Total as at end 2012 || Total as at end 2011 
 Recoveries || Years 
   || 2008 || 2009 || 2010 || 2011 || 2012 
 Agriculture: ||   ||   ||   ||   ||   ||   ||   
 EAGF ||  356 ||  148 ||  172 ||  178 ||  161 || 1 015 ||  854 
 Rural Development ||  0 ||  25 ||  114 ||  161 ||  166 ||  466 ||  301 
 Cohesion ||  31 ||  102 ||  25 ||  48 ||  14 ||  219 ||  205 
 Internal policy areas ||  40 ||  100 ||  162 ||  268 ||  229 ||  799 ||  570 
 External policy areas ||  32 ||  81 ||  136 ||  77 ||  99 ||  425 ||  326 
 Administration ||  0 ||  9 ||  5 ||  2 ||  9 ||  25 ||  16 
 Total ||  459 ||  464 ||  614 ||  734 ||  678 || 2 949 || 2 272 
6.5    RECOVERY OF UNUSED PRE-FINANCING AMOUNTS
 EUR millions 
   ||   || 2012 || 2011 
 Agriculture: ||   ||   ||   
 EAGF ||   ||  0 ||  0 
 Rural Development ||   ||  0 ||  0 
 Cohesion Policy: ||   ||   ||   
 ERDF ||   ||  38 ||  13 
 Cohesion Fund ||   ||  5 ||  2 
 ESF ||   ||  214 ||  17 
 FIFG/EFF ||   ||  0 ||  0 
 EAGGF Guidance ||   ||  5 ||  10 
 Internal policy areas ||   ||  207 ||  212 
 External policy areas ||   ||  104 ||  72 
 Administration ||  2 ||  0 
 Total recovered ||   || 575 ||  327 
The above amounts have been deducted
in arriving at the pre-financing amounts included under notes 2.6 and 2.10.
6.6    RECOVERIES RELATING TO OWN RESOURCE REVENUES
   || EUR millions 
   ||   || 2012 || 2011 
 Amounts recovered: - Principal - Interest ||   ||   133 160 ||   63 312 
 Total recovered ||   || 293 || 375 
6.7    ADDITIONAL
CORRECTIONS (WITHDRAWALS AND RECOVERIES) REPORTED AS IMPLEMENTED BY MEMBER
STATES FOR THE PERIOD
2007-2013
 EUR millions ||
 Member State || ERDF/CF || ESF || EFF || Total at end 2012 ||
 Belgium ||  3 ||  11 ||  - ||  14 ||
 Bulgaria ||  13 || 2 ||  0 ||  15 ||
 Czech Republic ||  191 ||  37 ||  - ||  228 ||
 Denmark ||  0 ||  0 ||  0 ||  0 ||
 Germany ||  290 ||  49 ||  1 ||  340 ||
 Estonia ||  4 ||  0 ||  0 ||  4 ||
 Ireland ||  0 ||  5 ||  0 ||  5 ||
 Greece ||  63 || - ||  0 ||  63 ||
 Spain ||  204 || 39 ||  9 ||  252 ||
 France ||  42 ||  37 ||  0* ||  79 ||
 Italy ||  141 ||  27 ||  0 ||  168 ||
 Cyprus ||  0 ||  0 ||  0 ||  1 ||
 Latvia ||  10 || - ||  0 ||  10 ||
 Lithuania ||  6 ||  0 || 0 ||  6 ||
 Luxembourg ||  - ||  0 || - ||  0 ||
 Hungary ||  26 || - ||  0 ||  26 ||
 Malta ||  1 ||  0 ||  - ||  1 ||
 Netherlands ||  1 ||  2 ||  0 ||  3 ||
 Austria ||  4 ||  1 ||  0 ||  5 ||
 Poland ||  204 || - ||  0 ||  204 ||
 Portugal ||  46 ||  28 ||  1 ||  75 ||
 Romania ||  43 || - ||  0 ||  43 ||
 Slovenia ||  5 ||  5 ||  - ||  10 ||
 Slovakia ||  33 || 4 ||  0 ||  37 ||
 Finland ||  1 ||  0 ||  0 ||  1 ||
 Sweden ||  2 ||  1 ||  1 ||  4 ||
 United Kingdom ||  38 ||  13 ||  1 ||  52 ||
 Cross-border ||  8 ||  - ||  - ||  8 ||
 TOTAL IMPLEMENTED ||  1 377 ||  261 ||  14 ||  1 652 ||
* Audit conclusions show that
  substantive improvements are needed in the French certifying authority
  reporting EFF recovery figures.
The table above shows
the cumulative financial corrections reported by each Member State since the
beginning of the 2007-2013 programming period to end 2012. These are in
addition to the corrections reported cumulatively by the Commission (see note 6.4.3). 
So as to gain additional assurance
as to the completeness and reliability of the Member States’ reporting on
recoveries and withdrawals, the Commission started an audit of structural
actions (ERDF, CF, ESF, EFF) in 2011 with the aim of ensuring that Member
States’ reporting is complete and reliable. Based on a risk analysis, a sample
of 12 certifying authorities in 10 Member States was selected
[1]. During 2012, the relevant Commission services
obtained reasonable assurance that 11 of the 12 audited certifying authorities
have satisfactory arrangements in place for keeping an account of amounts
concerning for the recovery and withdrawal of undue payments and for the reporting
of them to the Commission.
The Commission services will
continue this audit in 2013 and beyond in other Member States, following
analysis of the annual statements from the Member States on withdrawals and
recoveries to be received in 2013.
              7. FINANCIAL SUPPORT MECHANISMS
This note intends to give a
complete overview of the currently existing financial support mechanisms in the
EU, and so provides further information to that reported under note 2. The information included in the first part
of this note (7.1) relates to
borrowing and lending activities of the EU managed by the Commission. The information
in the second part of this note (7.2)
covers intergovernmental financial stability mechanisms outside the EU Treaty
framework and thus without an impact on the EU budget.
7.1      BORROWING
AND LENDING ACTIVITIES MANAGED BY THE COMMISSION
7.1.1   Borrowing and
lending activities – Overview
 Amounts at carrying value ||   || EUR millions 
   || MFA || Euratom || BOP || EFSM || ECSC in liquidation || Total 31.12.2012 || Total 31.12.2011 
 Loans (note 2.4.2) || 549 || 425 || 11 623 || 44 476 || 221 || 57 294 || 41 281 
 Borrowing (note 2.14) || 549 || 425 || 11 623 || 44 476 || 194 || 57 267 || 41 251 
The above amounts are at carrying
value whereas the tables below are presented in nominal values.
The EU is empowered by the EU
Treaty to adopt borrowing programmes to mobilise the financial resources
necessary to fulfill its mandate. The European Commission, acting on behalf of
the EU, currently operates three main programmes, Macro-Financial Assistance
(MFA), Balance of Payments (BOP) assistance and the European Financial
Stabilisation Mechanism (EFSM), under which it may grant loans and fund these
by issuing debt instruments in the capital markets or with financial
institutions.
The key points or characterisitics to note for these
three instruments are:
-         
EU
borrowing is raised on the capital markets or with financial institutions and not from the budget, as the EU
is not permitted to borrow to finance its ordinary budgetary expenses or a
budget deficit.
-         
The
size of the borrowings varies from small private placements of single or double
digit EUR million amounts to benchmark-size operations in the context of the BOP
and the EFSM loans. 
-         
The
funds raised are lent back-to-back to the beneficiary country, i.e. with the
same coupon, maturity and amount. Notwithstanding the back-to-back methodology,
the debt service of the bond is a legal obligation of the EU, which will ensure
that all bond payments are made timely and fully. To this effect, BOP
beneficiares are required to deposit reimbursements 7 days in advance of the
due dates and EFSM beneficiaries 14 days in advance, which allows the
Commission sufficient time to ensure timely payment in all circumstances.
-         
For
each country programme, the Council and Commission Decisions determine the
overall granted amount, the instalments to be disbursed, its maximum individual
maturity and maximum average maturity of the loan package. Subsequently, the
Commission and the beneficiary country agree loan/funding parameters, including
instalments and the payment of tranches. In addition, all but the first
instalment of the loan depend on compliance with strict conditions, with agreed
terms and conditions similar to IMF support, in the context of a joint EU/IMF
financial assistance, which is another factor influencing the timing of
funding. 
-         
This
implies that the timing and maturities of issuance are dependent on the related
EU lending activity.
-         
Funding
is exclusively denominated in euro and the maturity spectrum is 5 to 30 years. 
-         
Borrowings
are direct and unconditional obligations of the EU and guaranteed by the 28
Member States. 
-         
Should
a beneficiary country default, the debt service will be drawn from the
available treasury balance of the Commission, if possible. If that would not be
possible, the Commission would draw the necessary funds from the Member States.
EU Member States are legally obliged, according to the EU own resources
legislation (Article 12 of Council Regulation 1150/2000), to make available
sufficient funds to meet the EU’s obligations. Thus investors are only exposed
to the credit risk of the EU, not to that of the beneficiary of loans funded. 
-         
 “Back-to-back”
lending ensures that the EU budget does not assume any interest rate or foreign
exchange risk.
Additionally, the Euratom
legal entity (represented by the Commission) borrows money to lend to both
Member and non-Member States to finance projects relating to energy
installations. Finally, the European Coal & Steel Community (ECSC)
in liquidation has, following a restructuring of debts of a defaulting debtor,
acquired in 2002 and 2007 promissory notes from the EIB (rated AAA). At the
balance sheet date, the book value of these promissory notes amounted to EUR
221 million.
More details on each of these
instruments are given below. The effective interest rates (expressed as a range
of interest rates) were as follows:
 Loans || 31.12.2012 || 31.12.2011 
 Macro Financial Assistance (MFA) || 0.298%-4.54% || 1.58513%-4.54% 
 Euratom || 0.431%-5.76% || 1.067%-5.76% 
 BOP || 2.375%-3.625% || 2.375%-3.625% 
 EFSM || 2.375%-3.750% || 2.375%-3.50% 
 ECSC in liquidation || 5.2354%-5.8103% || 1.158%-5.8103% 
 Borrowings || 31.12.2012 || 31.12.2011 
 Macro Financial Assistance (MFA) || 0.298%-4.54% || 1.58513%-4.54% 
 Euratom || 0.351%-5.6775% || 0.867%-5.6775% 
 BOP || 2.375%-3.625% || 2.375%-3.625% 
 EFSM || 2.375%-3.750% || 2.375%-3.50% 
 ECSC in liquidation || 6.92%-9.78% || 1.158%-9.2714% 
7.1.2   European
Financial Stabilisation Mechanism (EFSM)
 EFSM nominal value || EUR millions 
   || Ireland || Portugal || Total 
 Total loans granted || 22 500 || 26 000 || 48 500 
 Disbursed at 31.12.11 || 13 900 || 14 100 || 28 000 
 Disbursed in 2012 || 7 800 || 8 000 || 15 800 
 Loans disbursed at 31.12.12 || 21 700 || 22 100 || 43 800 
 Loans repaid at 31.12.12* || 0 || 0 || 0 
 Loans outstanding at 31.12.12 || 21 700 || 22 100 || 43 800 
 Undrawn amounts at 31.12.12 || 800 || 3 900 || 4 700 
*A table showing the reimbursement schedule for these loans
is given at the end of note 7.1.3.
On 11 May 2010 the Council adopted the
EFSM to preserve financial stability in Europe (Council Regulation (EU) n°
407/2010). The mechanism is based on Art. 122.2 of the TFEU and enables the
granting of financial assistance to a Member State in difficulties or seriously
threatened with severe difficulties caused by exceptional circumstances beyond
its control. The assistance may take the form of a loan or credit line. The
Commission borrows funds on the capital markets or with financial institutions
on behalf of the EU and lends these funds to the beneficiary Member State. For
each country receiving a loan under the EFSM, a quarterly assessment on the
fulfilment of the policy conditions attached to the loan is carried out before
an instalment is disbursed.
The ECOFIN Council conclusions of 9
May 2010 restrict the facility to EUR 60 billion but the legal limit is
provided in Article 2.2 of the Council Regulation no. 407/2010, which restricts
the outstanding amount of loans or credit lines to the margin available under
the own resources ceiling. Borrowings related to loans disbursed under the EFSM
are guaranteed by the EU budget – thus at 31 December 2012, the budget is
exposed to a maximum possible risk of EUR 44 476 million regarding these loans (the
EUR 43.8 billion above being the nominal value). As the borrowings under the
EFSM are guaranteed by the EU budget, the European Parliament scrutinises the
Commission's EFSM actions and exercises control in the context of the budget
and discharge procedure.
The Council decided by Implementing
decision in December 2010 on a loan to Ireland of maximum EUR 22.5 billion, and in May 2011
on a loan to Portugal of maximum EUR 26 billion. The initial implementing
decisions fixed interest with a margin to result in conditions similar to those
of the IMF support. With the adoption of Council Implementing Decisions no.
682/2011 and 683/2011 of 11 October 2011, the Council
suppressed the interest margin retroactively and extended the maximum average
maturity from 7.5 years to 12.5 years and the maturity of individual tranches
up to 30 years. On 12 April 2013, the ECOFIN agreed to further lengthen the maximum average
maturity of the EFSM loans to Ireland and Portugal by 7 years to 19.5 years.
The extension would smooth the debt redemption profile of both countries and
lower their refinancing needs in the post-programme period.
Under the EFSM, the EU intends to issue further
bonds in the last quarter of 2013 for a total amount of EUR 3 billion for loans
to Ireland and Portugal. The EFSM will no longer engage in new financing programmes
or enter into new loan facility agreements, but will remain active in financing
the on-going programmes for Portugal and Ireland (see also note 7.2.2 below).
7.1.3   Balance
of Payments (BOP)
The BOP facility, a
policy-based financial instrument, provides medium-term financial assistance to
Member States of the EU. It enables the granting of loans to Member States
which are experiencing, or are seriously threatened with, difficulties in their
balance of payments or capital movements. Only Member States which have not
adopted the Euro may benefit from this facility. The maximum outstanding amount
of loans granted under the instrument is limited to EUR 50 billion. Borrowings
related to these BOP loans are guaranteed by the EU budget – thus at 31 December 2012, the
budget is exposed to a maximum possible risk of EUR 11 623 million regarding
these loans (EUR 11.4 billion below being the nominal value).
 BOP nominal value || EUR millions 
   || Hungary || Latvia || Romania || Total 
 Total loans granted || 6 500 || 3 100 || 6 400 || 16 000 
 Disbursed in 2008 || 2 000 || - || - || 2 000 
 Disbursed in 2009 || 3 500 || 2 200 || 1 500 || 7 200 
 Disbursed in 2010 || - || 700 || 2 150 || 2 850 
 Disbursed in 2011 || - || - || 1 350 || 1 350 
 Disbursed in 2012 || - || - || - || - 
 Loans disbursed 31.12.2012 || 5 500 || 2 900 || 5 000 || 13 400 
 Loans repaid at 31.12.2012 || (2 000) || - || - || (2 000) 
 Outstanding amount at 31.12.2012 || 3 500 || 2 900 || 5 000 || 11 400 
 Undrawn amounts 31.12.2012 || 0 || 0 || 1 400 || 1 400 
*A table showing the reimbursement schedule for these loans
is given at the end of this note.
Between November 2008
and end 2012, loans amounting to EUR 16 billion were granted to Hungary, Latvia
and Romania, of which EUR 13.4 billion had been disbursed by the end of 2012.
It should be noted that the BOP assistance programme for Hungary expired in
November 2010 (with EUR 1 billion undrawn) and a first repayment of EUR 2
billion was received as scheduled in December 2011. The BOP assistance
programme for Latvia expired in January 2012 (with EUR 200 million undrawn). The
BOP first assistance programme for Romania expired in May 2012 with all the
amount granted being disbursed.
In February 2011,
Romania requested a follow-up precautionary financial assistance programme
under the BOP Facility to support the re-launch of economic growth. On 12 May
2011 the Council decided to make available precautionary EU BOP assistance for
Romania of up to EUR 1.4 billion (Council Decision 2011/288/EU) that if
requested, should be provided in a form of a loan with a maximum maturity of
seven years. This
precautionary assistance expired at end-March 2013 without being drawn. 
The following table
provides an overview of the planned reimbursement schedule in nominal value for
outstanding EFSM and BOP loan amounts at the date of signature of these
accounts:
 EUR Billions 
 Year || BOP || EFSM || Total 
 Hungary || Latvia || Romania || Total || Ireland || Portugal || Total 
 2014 || 2.0 || 1.0 ||   || 3.0 ||   ||   ||   || 3.0 
 2015 ||   || 1.2 || 1.5 || 2.7 || 5.0 ||   || 5.0 || 7.7 
 2016 || 1.5 ||   ||   || 1.5 ||   || 4.75 || 4.75 || 6.25 
 2017 ||   ||   || 1.15 || 1.15 ||   ||   ||   || 1.15 
 2018 ||   ||   || 1.35 || 1.35 || 3.9 || 0.6 || 4.5 || 5.85 
 2019 ||   || 0.5 || 1.0 || 1.5 ||   ||   ||   || 1.5 
 2021 ||   ||   ||   ||   || 3.0 || 6.75 || 9.75 || 9.75 
 2022 ||   ||   ||   ||   ||   || 2.7 || 2.7 || 2.7 
 2025 ||   || 0.2 ||   || 0.2 ||   ||   ||   || 0.2 
 2026 ||   ||   ||   ||   || 2.0 || 2.0 || 4.0 || 4.0 
 2027 ||   ||   ||   ||   || 1.0 || 2.0 || 3.0 || 3.0 
 2028 ||   ||   ||   ||   || 2.3 ||   || 2.3 || 2.3 
 2032 ||   ||   ||   ||   || 3.0 ||   || 3.0 || 3.0 
 2038 ||   ||   ||   ||   ||   || 1.8 || 1.8 || 1.8 
 2042 ||   ||   ||   ||   || 1.5 || 1.5 || 3.0 || 3.0 
 Total || 3.5 || 2.9 || 5.0 || 11.4 || 21.7 || 22.1 || 43.8 || 55.2 
7.1.4   MFA, EURATOM
& ECSC in Liquidation
MFA is a policy-based financial
instrument of untied and undesignated balance of payment and/or budget support
to partner third-countries geographically close to the EU territory. It takes
the form of medium/long term loans or grants or an appropriate combination of
both and generally complements financing provided in the context of an
IMF-supported adjustment and reform program. At 31 December 2012, a further EUR 100 million
of loan agreements have been entered into by the Commission but not yet drawn
down by the other party before the year-end. The Commission has not received
third-party guarantees for these loans, but they are guaranteed by the
Guarantee Fund (see note 2.4).
Euratom is a legal entity of the EU and is
represented by the European Commission. It grants loans to Member States for
the purpose of financing investment projects in the Member States relating to
the industrial production of electricity in nuclear power stations and to
industrial fuel cycle installations. It also grants loans to non-Member States
for improving the level of safety and efficiency of nuclear power stations and
installations in the nuclear fuel cycle which are in service or under
construction. Guarantees from third-parties of EUR 423 million (2011: EUR 447
million) have been received covering these loans.
ECSC loans are granted
by the ECSC in liquidation on borrowed funds in accordance with articles 54 and
56 of the ECSC Treaty as well as three unquoted debt securities issued by the
EIB as substitute of a defaulted debtor. These debt securities will be held
till their final maturity (2017 and 2019) in order to cover the service of
related borrowings. The changes in carrying amount correspond to the change in
accrued interests plus the amortisation of the year of premiums paid and
transaction cost incurred at inception, calculated according to the effective
interest rate method.
              7.2     INTER-GOVERMENTAL
FINANCIAL STABILITY MECHANISMS OUTSIDE THE EU TREATY FRAMEWORK
7.2.1   European
Financial Stability Facility (EFSF)
The European Financial Stability
Facility ("EFSF") was created by the Eurozone Member States following
the decisions taken on 9 May 2010 by the ECOFIN Council. Its mandate is to
safeguard financial stability in Europe by providing financial assistance to Eurozone
Member States. The EFSF does not provide new lending after 1 July 2013 (see
note 7.2.2 below), in keeping with
the current Framework Agreement. In accordance with an agreement by the
Euro-area Heads of State/Governments reached in July 2011, the EFSF is
authorised to use the following instruments linked to appropriate
conditionality:
-         
Provide
loans to countries in financial difficulties 
-         
Intervene
in the debt primary and secondary markets. Intervention in the secondary market
will be only on the basis of an ECB analysis recognising the existence of
exceptional financial market circumstances and risks to financial stability 
-         
Act
on the basis of a precautionary programme 
-         
Finance
recapitalisations of financial institutions through loans to governments
-         
Provide
partial risk protection certificates alongside new issuances of vulnerable
Member States 
The EFSF is backed by guarantee
commitments from the Eurozone Member States for a total of EUR 780 billion
and has a lending capacity of EUR 440 billion. It is not guaranteed by the EU
budget. The EFSF is a Luxembourg-registered commercial company owned by
euro-area Member States outside the EU Treaty framework and thus is not an EU
body and is entirely separate from and not consolidated in the EU accounts.
Consequently it has no impact on the EU accounts, aside from the possible
sanctions revenue described below. 
The Commission is responsible for
negotiating the policy conditionality attached to the financial assistance and
the monitoring of compliance with that conditionality. Regulation 1173/2011 of
the Parliament and Council allows for the imposition of sanctions in the form
of fines on Member States whose currency is the Euro. These fines, being 0.2%
of the Member State's GDP in the preceding year, can be applied in cases where
a Member State has not taken appropriate actions to correct an excessive budget
deficit, or where there has been manipulation of statistics. Similarly,
Regulation 1174/2011 on macroeconomic imbalances makes provision for an annual
fine on a Eurozone Member State of 0.1% of GDP in the cases where a Member
State has not taken the requested corrective action  or in case an insufficient
corrective action plan has been submitted. Regulation 1177/2011 updated
Regulation 1467/97 on speeding up and clarifying the implementation of the
excessive deficit procedure. This updated Regulation also foresees the
possibility of issuing fines to Eurozone Member States (equal to 0.2% of GDP
plus a variable component). According to all three Regulations, any fines
collected by the Commission shall be passed to the EFSF, or its successor
mechanism. Presently, it is foreseen that such fines will transit through the
EU Budget and then be transferred to the EFSF. This would mean that such amounts
would appear as both a budget revenue and expense, thus having no impact on the
overall budget result. Likewise they would have no impact on the economic
result as presented in the EU financial statements.
 EFSF nominal value || EUR millions 
   || Ireland || Portugal || Greece* || Total 
 Total loans granted || 17 700 || 26 000 || 109 100 || 152 800 
 Loans disbursed at 31.12.2012 || 12 000 || 18 200 || 73 700 || 103 900 
 Loans repaid at 31.12.2012 || - || - || - || - 
 Loans outstanding at 31.12.2012 || 12 000 || 18 200 || 73 700 || 103 900 
 Undrawn amounts at 31.12.2012 || 5 700 || 7 800 || 35 400 || 48 900 
*2nd programme
7.2.2   European
Stability Mechanism (ESM)
The European Council agreed on 17
December 2010 on the need for Eurozone Member States to establish a permanent
stability mechanism: the European Stability Mechanism ("ESM"), an
intergovernmental organisation under public international law outside the EU
Treaty framework. The ESM Treaty was signed by the 17 Eurozone Member States on
the 2nd of February 2012 and became operational in October 2012. The ESM has assumed
the tasks fulfilled by the EFSM and, as from 1 July 2013, the tasks fulfilled
by the EFSF becoming the sole and permanent mechanism for responding to new
requests for financial assistance to Eurozone Member States. Consequently, the
EFSF and the EFSM will no longer engage in new financing programmes or enter
into new loan facility agreements, but will remain active in financing the
on-going programmes for Portugal, Ireland and Greece. Loans granted under the
EFSM will therefore continue to be disbursed and repaid under EFSM rules and so
the related borrowings will still be guaranteed by the EU budget and will
remain on the EU balance sheet. The creation of the ESM will thus not have an
impact on the existing commitments under the EFSM. It must also be noted that the
EU budget will not guarantee ESM borrowings.
The ESM is backed by a robust capital structure,
with a total subscribed capital of EUR 700 billion, of which EUR 80 billion in
the form of paid-in capital provided by the Eurozone Member States. With such
capital, its lending capacity in principle should reach EUR 500 billion. The assistance provided
under the ESM will be accompanied by conditionality, appropriate to the
assistance instrument chosen. Loans to beneficiary Member States will be
conditional on the implementation of a strict economic and fiscal adjustment
programme, in line with existing arrangements. As this mechanism has its own
legal personality and is funded directly by the Eurozone Member States, it is
not an EU body and it has no impact on either the EU accounts or the EU budget,
aside from the possible sanctions revenue described below. The Commission is
responsible for negotiating the policy conditionality attached to the financial
assistance and the monitoring of compliance with that conditionality (as with
the EFSF above). Each country receiving financial assistance from the ESM will
be subject to regular assessments on the fulfilment of the policy
conditionality before each instalment is disbursed. 
As stated above, fines collected under Regulations
1173/2011, 1174/2011 and 1177/2011 will pass through the EU budget and be
transferred to the ESM once the EFSF is no longer operational. Furthermore, the
Treaty on Stability, Coordination and Governance signed by 25 Member States
(excluding the UK and Czech Republic) foresees penalty payments on any of the
"Contracting Parties" where that Member State has not taken necessary
measures to address a breach of deficit criterion. Penalties imposed (which
cannot exceed 0.1% of GDP) will be payable to the ESM if applied to Eurozone
Member States (thus with no impact on the EU budget result, as with the EFSF
above), or to the EU budget for non-Euro Member States – see Article 8
paragraph 2 of the Treaty. In the latter case, the sanction amount will be
revenue for the EU budget and reflected as such in its accounts.
 ESM nominal value || EUR millions 
   ||   ||   ||   || Spain 
 Total loans granted ||   ||   ||   || 100 000 
 Loans disbursed at 31.12.2012 ||   ||   ||   || 39 468 
 Loans repaid at 31.12.2012 ||   ||   ||   || - 
 Loans outstanding at 31.12.2012 ||   ||   || 39 468 
 Undrawn amounts at 31.12.2012 ||   ||   ||   || 60 532 
              8. FINANCIAL RISK MANAGEMENT
The following disclosures with
regard to the financial risk management of the EU relate to:
–      
lending
and borrowing activities carried out by the European Commission through:
European Financial Stabilty Mechanism (EFSM), Balance of Payments (BOP), Macro
Financial Assistance (MFA), Euratom actions and the European Coal & Steel
Community (in Liquidation); 
–      
the
treasury operations carried out by the European Commission in order to
implement the EU budget, including the receipt of fines; and
–      
the
Guarantee Fund for external actions.
8.1      Types
of risk

Market risk is the risk that the fair value or future cashflows of a
financial instrument will fluctuate, because of changes in market prices.
Market risk embodies not only the potential for loss, but also the potential
for gain. It comprises currency risk, interest rate risk and other price risk
(the EU has no significant other price risk).
1.     
Currency
risk is
the risk that the EU's operations or its investments' value will be affected by
changes in exchange rates. This risk arises from the change in price of one
currency against another. 
2.     
Interest
rate risk
is the possibility of a reduction in the value of a security, especially a
bond, resulting from an increase in interest rates. In general, higher interest
rates will lead to lower prices of fixed rate bonds, and vice versa.
Credit risk is the risk of loss due
to a debtor's/borrower's non-payment of a loan or other line of credit (either
the principal or interest or both) or other failure to meet a contractual
obligation. The default events include a delay in repayments, restructuring of
borrower repayments and bankruptcy.

Liquidity risk is the risk that arises from the difficulty of selling an
asset, for example, the risk that a given security or asset cannot be traded
quickly enough in the market to prevent a loss or meet an obligation.
              8.2     Risk management
policies 
Borrowing & Lending activities
The lending and borrowing
transactions, as well as related treasury management, are carried out by the EU
according to the respective Council Decisions, if applicable, and internal
guidelines. Written procedure manuals covering specific areas such as
borrowings, loans and treasury management have been developed and are used by
the relevant operating units. As a general rule, there are no activities to
compensate interest rate variations or foreign currency variations
("hedging" activities) carried-out as lending operations are
generally financed by "back-to-back" borrowings, which thus do not
generate open interest rate or currency positions. The application of the
"back-to-back" character is checked regularly.
The European Commission manages the
liquidation of the liabilities and no new loans or corresponding funding is
foreseen for the ECSC in liquidation. New ECSC borrowings are restricted to
refinancing with the aim of reducing the cost of funds. As far as treasury
operations are concerned, the principles of prudent management with a view to
limiting financial risks are applied.
              Treasury
The rules and principles for the
management of the Commission's treasury operations are laid down in the Council
Regulation 1150/2000 (amended by Council Regulations 2028/2004 and 105/2009)
and in the Financial Regulation (Council Regulation 1605/2002, amended by
Council Regulations 1995/2006, 1525/2007 and 1081/2010) and its Implementing
Rules (Commission Regulation 2342/2002, amended by Commission Regulations
1261/2005, 1248/2006 and 478/2007).
As a result of the above
regulations the following main principles apply:
–      
Own
resources are paid by the Member States in accounts opened for this purpose in
the name of the Commission with the Treasury or the body appointed by each
Member State. The Commission may draw on the above accounts solely to cover its
cash requirements.
–      
Own
Resources are paid by Member States in their own national currencies, while the
Commission's payments are mostly denominated in EUR.
–      
Bank
accounts opened in the name of the Commission may not be overdrawn. This
restriction does not apply to the Commission's own resource accounts in case of
a default on loans contracted or guaranteed pursuant to EU Council regulations
and decision and under certain conditions in case the cash resource
requirements are in excess of the assets of the accounts.
–      
Funds
held in bank accounts denominated in other currencies than EUR are either used
for payments in the same currencies or periodically converted in EUR.
In addition to the own resources
accounts, other bank accounts are opened by the Commission, with central banks
and commercial banks, for the purpose of executing payments and receiving
receipts other than the Member State contributions to the budget. 
Treasury and payment operations are
highly automated and rely on modern information systems. Specific procedures
are applied to guarantee system security and to ensure segregation of duties in
line with the Financial Regulation, the Commission’s internal control
standards, and audit principles.
A written set of guidelines and
procedures regulates the management of the Commission's treasury and payment
operations with the objective of limiting operational and financial risk and
ensuring an adequate level of control. They cover the different areas of
operation (for example: payment execution and cash management, cashflow
forecasting, business continuity, etc.), and compliance with the guidelines and
procedures is checked regularly. Additionally, information is exchanged between
DG BUDGET and DG ECFIN on risk management and best exposures. 
Fines
Provisionally cashed fines: deposits
Amounts received before 2010 remain
in bank accounts with banks
specifically selected for the deposit of provisionally cashed fines. The
selection of banks is conducted in compliance with tender procedures defined by the
Financial Regulation. Placement of funds with specific banks is determined by
the internal risk management policy defining the credit rating requirements and
the amount of funds which could be placed in proportion to the counterparty
equity. Financial and
operational risks are identified and evaluated and compliance with internal policies and procedures is checked
regularly.
Provisionally cashed fines: BUFI
portfolio
From 2010 onwards provisionally
cashed fines amounts are invested in a specifically created fund, BUFI. The
asset management for provisionally cashed fines is carried out by the
Commission in accordance with internal guidelines and the asset management
guidelines. Procedural manuals covering specific areas such as treasury
management have been developed and are used by the relevant operating units.
Financial and operational risks are identified and evaluated and compliance
with internal guidelines and procedures is checked regularly.
The objectives of the asset
management activities are to invest the fines paid to the Commission in such a
way as to:
(a) ensure that the funds are
easily available when needed, while
(b) aiming at
delivering under normal circumstances a return which on average is equal to the
return of the BUFI Benchmark minus costs incurred.
Investments are restricted
basically to the following categories: term deposits with Eurozone Central Banks, Eurozone sovereign debt agencies, fully
state-owned or state-guaranteed banks or supranational institutions; bonds,
bills and Certificates of Deposit issued by sovereign entities creating a
direct Eurozone sovereign exposure or which are
issued by supranational institutions.
Bank guarantees
Significant amounts of
guarantees issued by financial institutions are held by the Commission in
relation to the fines it imposes to companies breaching EU competition rules
(see note 2.9.1). These guarantees are provided by fined
companies as an alternative to making provisional payments. The
guarantees are managed in compliance with the internal risk management policy. Financial and operational risks
are identified and evaluated and compliance with internal policies and procedures is checked
regularly.
Guarantee Fund
The rules and principles for the
asset management of the Guarantee Fund (see note 2.4)
are laid out in the Convention between the European Commission and the EIB
dated 25 November 1994 and the subsequent
amendments dated 17/23 September 1996, 8 May 2002, 25 February
2008 and 9 November 2010. The Guarantee Fund operates only in EUR. It
exclusively invests in this currency in order to avoid any foreign currency
risk. Management of the assets is based upon the traditional rules of prudence
adhered to for financial activities. It is required to pay particular attention
to reducing the risks and to ensuring that the managed assets can be sold or
transferred without significant delay, taking into account the commitments
covered.
8.3      Currency
risks
Borrowing & Lending activities
Most financial assets and
liabilities are in EUR, so in these cases the EU has no foreign currency risk.
However, the EU does give loans in USD through the financial instrument
Euratom, which are financed by borrowings with an equivalent amount in USD
(back-to-back operation). At the balance sheet date the EU has no foreign
currency risk with regard to Euratom. The ECSC in liquidation has a small
foreign currency net exposure of EUR equivalent 1.35 million arising from EUR
equivalent 1.13 million housing loans and EUR equivalent 0.22 million current
account balances.
              Treasury
Own resources paid by Member States
in currencies other than EUR are kept on the own resources accounts, in
accordance with the Own Resources Regulation. They are converted into EUR when
they are needed to cover for the execution of payments. The procedures applied
for the management of these funds are dictated by the above Regulation. In a
limited number of cases these funds are directly used for payments to be
executed in the same currencies.
A number of accounts in EU
currencies other than EUR, and in USD and CHF, are held by the Commission with
commercial banks, for the purpose of executing payments denominated in these
same currencies. These accounts are replenished depending on the amount of
payments to be executed, as a consequence their balances do not represent
exposure to currency risk.
When miscellaneous receipts (other
than own resources) are received in currencies other than EUR, they are either
transferred to Commission's accounts held in the same currencies, if they are
needed to cover for the execution of payments, or converted into EUR and
transferred to accounts held in EUR. Imprest accounts held in currencies other
than EUR are replenished depending on the estimated short term local payments
needs in the same currencies. Balances on these accounts are kept within their
respective ceilings.
Fines
Provisionally cashed
fines (deposits and BUFI portfolio) and bank guarantees
Since all fines are imposed and
paid in EUR, there is no foreign currency risk.
Guarantee Fund
The financial assets are in EUR so
there is no currency risk.
8.4      Interest
rate risk
Borrowing & Lending activities
Borrowings and loans with variable
interest rates
Due to the nature of its borrowing
and lending activities, the EU has significant interest-bearing assets and
liabilities. MFA and Euratom borrowings issued at variable rates expose
the EU to interest rate risk. However, the interest rate risks that arise from
borrowings are offset by equivalent loans in terms and conditions (back-to-back).
At the
balance sheet date, the EU has loans (expressed in nominal amounts) with
variable rates of EUR 0.7 billion (2011: EUR 0.8 billion), with a re-pricing
taking place every 6 months. 

Borrowings and loans with fixed
interest rates
The EU also has MFA and Euratom
loans with fixed rates totalling EUR 271 million in 2012 (2011: EUR 236 million)
and which have a final maturity date between one and five years (EUR 25
million) and more than five years (EUR 246 million). More significantly, the EU
has ten loans under the financial instrument BOP with fixed interest rates
totalling EUR 11.4 billion in 2012 (2011: EUR 11.4 billion) and with a final
maturity between one and five years (EUR 8.4 billion) and more than five years
(EUR 3.0 billion).
Under the financial instrument EFSM, the EU has 18 loans with fixed interest
rates totalling EUR 43.8 billion in 2012 and with a final maturity between one
and five years (EUR 9.8 billion) and more than five years (EUR 34 billion).
Due to the nature of its
activities, the ECSC in liquidation is exposed to interest rate risk. The
interest rate risks that arise from borrowings are generally offset by
equivalent loans in terms and conditions. As regards asset management operations,
there are bonds with variable interest rates represent 4% of the ECSC portfolio.
Zero coupon bonds represented 8% of the bond portfolio at the balance sheet
date.
              Treasury
The Commission's treasury does not
borrow any money; as a consequence it is not exposed to interest rate risk. It
does, however, earn interest on balances it holds on its different banks
accounts. The Commission has therefore put in place measures to ensure that
interest earned on its bank accounts regularly reflects market interest rates,
as well as their possible fluctuation. 
Accounts opened with Member States
Treasuries or National Central Banks for own resources receipts are
non-interest bearing and free of charges. For all other accounts held with
National Central Banks the remuneration depends on the specific conditions
offered by each bank; interest rates applied are variable and adjusted to
market fluctuations. 
Overnight balances held on
commercial bank accounts earn interest on a daily basis. This is based on
variable market rates to which a contractual margin (positive or negative) is
applied. For most of the accounts the interest calculation is linked to the
EONIA (Euro over night index average), and is adjusted to reflect any
fluctuations of this rate. For some other accounts the interest calculation is
linked to the ECB marginal rate for its main refinancing operations. As a
result no risk exists that the Commission earns interest at rates lower than
market rates.
Fines
Provisionally cashed
fines (deposits, BUFI portfolio) and bank guarantees
Depositis and bank guarantees are not exposed to interest
rate risks. Interest
earned by deposits reflect market interest rates as well as their possible
fluctuation. There are
no bonds with variable interest rates in the BUFI portfolio.
Guarantee Fund
Debt securities within the
Guarantee Fund issued at variable interest rates are subject to the volatility
effects of these rates, whereas debt securities at fixed rates have a risk with
regard to their fair value. Fixed rate bonds represent approximately 67% of the
investment portfolio at the balance sheet date (2011: 83%).

8.5      Credit risk
Borrowing & Lending activities
Exposure to credit risk is managed
firstly by obtaining country guarantees in the case of Euratom, then through
the Guarantee Fund (MFA & Euratom), then by the possibility of
drawing the necessary funds from the Commission's own resource accounts with
the Member States and ultimately through the Budget of the EU. The Own Resource
legislation fixes the ceiling for own resource payments at 1.23% of Member
States' GNI and during 2012 0.93% was actually used to cover payment
appropriations. This means that at 31 December 2012 there existed an available
margin of 0.3% to cover these guarantees. The Guarantee Fund for external
actions was set up in 1994 to cover default risks related to borrowings which
finance loans to countries outside the EU. In any case, the exposure to credit
risk is mitigated by the possibility to draw on the Commission's own resource
accounts with Member States in excess of the assets on those accounts in case a
debtor would be unable to reimburse the amounts due in full. To this end the EU
is entitled to call upon all the Member States to ensure compliance with the
EU's legal obligation towards its lenders.
As far as treasury operations are
concerned, guidelines on the choice of counterparties must be applied.
Accordingly, the operating unit will be able to enter into deals only with
eligible banks having sufficient counterparty limits.
ECSC's exposure to credit risk is
managed through regular analysis of the ability of borrowers to meet interest
and capital repayment obligations. Exposure to credit risk is also managed by
obtaining collateral as well as country, corporate and personal guarantees. As
far as treasury operations are concerned, guidelines on the choice of
counterparties must be applied. The operating unit is only allowed to enter
into deals with eligible banks having sufficient counterparty limits.
              Treasury
Most of the Commission's treasury
resources are kept, in accordance with Council Regulation 1150/2000 on own
resources, in the accounts opened by Member States for the payment of their
contributions (own resources). All such accounts are held with Member States'
treasuries or national central banks. These institutions carry the lowest
credit (or counterparty) risk for the Commission as the exposure is with its
Member States. For the part of the Commission's treasury resources kept with
commercial banks in order to cover the execution of payments, replenishment of
these accounts is instructed on a just-in-time basis and is automatically
managed by the treasury cash management system. Minimum cash levels,
proportional to the average amount of daily payments executed from it, are kept
on each account. As a consequence the amounts kept overnight on these accounts
remain constantly at low levels (overall between EUR 20 million and EUR 100
million on average, spread over more than 20 accounts) and so ensure the
Commission's risk exposure is limited. These amounts should be viewed with
regard to the overall treasury balances which fluctuate between EUR 1 billion
and EUR 35 billion, and with an overall amount of payments executed in 2012
that equals EUR 139.5 billion.
In addition, specific guidelines
are applied for the selection of commercial banks in order to further minimise
counterparty risk to which the Commission is exposed:
–      
All
commercial banks are selected by call for tenders. The minimum short term
credit rating required for admission to the tendering procedures is Moody's P-1
or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in
specific and duly justified circumstances.
–      
The
credit ratings of the commercial banks where the Commission has accounts are
reviewed at least on a monthly basis, or with higher frequency if and when
needed. Intensified monitoring measures and daily reviews of commercial banks'
ratings were adopted in the context of the financial crisis, and kept in place during
2012.
–      
In
delegations outside the EU imprest accounts are held with local banks selected
by a simplified tendering procedure. Rating requirements depend on the local
situation and may significantly differ from one country to another. In order to
limit risk exposure, balances on these accounts are kept at the lowest possible
levels (taking into account operational needs); they are regularly replenished,
and the applied ceilings are reviewed on a yearly basis.
Fines
Provisionally cashed fines: deposits
The banks holding deposits for the
fines provisionaly cashed before 2010 are selected in tender procedure in
compliance with the
risk management policy defining the credit rating requirements and the amount of
funds which could be placed in proportion to the counterparty equity.
For commercial banks that have been
specifically selected for the deposit of provisionally cashed fines (restricted
cash), a minimum long-term rating A (S&P or equivalent) in all the three
main rating agencies and a minimum short term rating A-1 (S&P or
equivalent) is required as a general rule. Specific measures are applied in
case banks in this group are subject to downgrade. In addition the amount
deposited with each bank is limited to a certain percentage of its own funds,
which varies depending on the rating level of each institution. The calculation
of such limit also takes into account the amount of outstanding guarantees
issued to the Commission by the same institution. The compliance of outstanding deposits with the applicable policy
requirements is reviewed regularly.
Provisionally cashed fines: BUFI portfolio
For investments from provisionally
cashed fines the Commission takes on exposure to credit risk which is the risk
that a counterparty will be unable to pay amounts in full when due. The highest
concentration of exposure is towards France and Germany as each of these
countries represents respectively 53% and 24% of the total volume of the
portfolio.
Bank guarantees
Significant amounts of guarantees
issued by financial institutions are also held by the Commission in relation to
the fines it imposes to companies breaching EU competition rules (see note 2.9.1). These guarantees are provided by fined companies
as an alternative to making provisional payments. The risk management policy
applied for the acceptance of such guarantees has been reviewed in 2012 and a
new combination of credit rating requirements and limited percentages per
counterpart (proportional to each counterpart's own funds) has been defined in
the light of the current financial environment in the EU. It continues to
ensure a high credit quality for the Commission. The compliance of the
outstanding guarantees with the applicable policy requirements is reviewed
regularly.
Guarantee Fund
In accordance with the agreement
between the EU and the EIB on the management of the Guarantee Fund, all
interbank investments should have a minimum rating from Moody's or equivalent
of P-1. As at 31 December 2012 fixed term deposits of EUR 242 million were made
with such counterparties (2011: EUR 300 million). 
8.6      Liquidity
risk
Borrowing & Lending activities
The liquidity risk that arises from
borrowings is generally offset by equivalent loans in terms and conditions
(back-to-back operations). For MFA and Euratom, the Guarantee Fund serves as a
liquidity reserve (or safety net) in case of payment default and payment delays
of borrowers. For BOP, the Council Regulation 431/2009 provides for a procedure
allowing sufficient time to mobilise funds through the Commission's own
resource accounts with the Member States. For EFSM, the Council Regulation
407/2010 provides for a similar procedure.
For the asset and liability
management of ECSC in liquidation, the Commission manages liquidity
requirements based on disbursement forecasts obtained through consultations with
the responsible Commission services.
              Treasury
EU budget principles ensure that
overall cash resources for the year are always sufficient for the execution of
all payments. In fact, the total Member States contributions equal the amount
of payment appropriations for the budgetary year. Member States contributions,
however, are received in twelve monthly instalments throughout the year, while
payments are subject to certain seasonality. Moreover, in accordance with the
Council Regulation 1150/2000 (Own Resources Regulation), Member States
contributions relating to (amending) budgets approved after the 16th
of a given month (N) become only available in month N+2, while the related
payment appropriations are immediately available. In order to ensure that treasury
resources are always sufficient to cover the payments to be executed in any
given month, procedures regarding regular cash forecasting are in place, and
own resources or additional funding can be called up in advance from Member
States if needed, and under certain conditions. In addition to the above, in
the context of the Commission's daily treasury operations, automated cash
management tools ensure that sufficient liquidity is available on each of the
Commission's bank accounts, on a daily basis.         

Guarantee Fund
The fund is managed according to
the principle that the assets shall have a sufficient degree of liquidity and
mobilisation in relation to the relevant commitments. The fund must maintain a
minimum of EUR 100 million in a portfolio with a maturity of < 12 months which is to
be invested in monetary instruments. As at 31 December 2012 these investments including
cash amounted to EUR 250 million. Furthermore a minimum of 20% of the fund's
nominal value shall comprise monetary instruments, fixed-rate bonds with a
remaining maturity of no more than one year and floating-rate bonds. As at 31 December 2012 this ratio
stood at 52%.
              9. RELATED PARTY DISCLOSURES
9.1        RELATED PARTIES
The related parties of the EU are the
other EU consolidated entities and the key management personnel of these
entities. Transactions between these entities take place as part of the normal
operations of the EU and as this is the case, no specific disclosure
requirements are necessary for these transactions in accordance with the EU
accounting rules.
9.2        KEY
MANAGEMENT ENTITLEMENTS
For the
purposes of presenting information on related party transactions concerning the
key management of the EU, such persons are shown here under five categories:
Category 1: the Presidents
of the European Council, the Commission and the Court of Justice
Category 2: the
Vice-president of the Commission and High Representative of the EU for Foreign
Affairs and Security Policy and the other Vice-presidents of the Commission
Category 3: the
Secretary-General of the Council, the Members of the Commission, the Judges and
Advocates General of the Court of Justice, the President and Members of the
General Court, the President and Members of the European Civil Service
Tribunal, the Ombudsman and the European Data Protection Supervisor
Category 4: the
President and Members of the Court of Auditors
Category 5: the highest
ranking civil servants of the Institutions and Agencies
A summary of
their entitlements are given below – further information can be found in the
Official Journal of the EU [L187 8/8/1967 last modified by Council Regulation
(EU, Euratom) No. 904/2012 of 24/9/2012 (L269 4/10/2012) and L268 20/10/1977
last modified by Council Regulation (EC, Euratom) no. 1293/2004 of 30/4/2004 (L243
15/7/2004)]. Other information is also available in the Staff Regulations
published on the Europa website which is the official document describing the
rights and obligations of all officials of the EU. Key management personnel
have not received any preferential loans from the EU.
 KEY MANAGEMENT FINANCIAL ENTITLEMENTS || EUR 
 Entitlement (per employee) || Category 1 || Category 2 || Category 3 || Category 4 || Category 5 
 Basic salary (per month) || 25 351.76 || 22 963.55 –23 882.09 || 18 370.84 – 20 667.20 || 19 840.51 – 21 126.47 || 11 681.17 –18 370.84 
   ||   ||   ||   ||   ||   
 Residential/Expatriation allowance || 15% || 15% || 15% || 15% || 16% 
   ||   ||   ||   ||   ||   
 Family allowances: ||   ||   ||   ||   ||   
 Household (% salary) Dependent child Pre-school Education, or Education outside place of work || 2%+170.52 372.61 91.02 252.81 505.39 || 2%+170.52 372.61 91.02 252.81 505.39 || 2%+170.52 372.61 91.02 252.81 505.39 || 2%+170.52 372.61 91.02 252.81 505.39 || 2%+170.52 372.61 91.02 252.81 505.39 
 Presiding judges allowance || N/A || N/A || 500 - 810.74 || N/A || N/A 
   ||   ||   ||   ||   ||   
 Representation allowance || 1 418.07 || 0 - 911.38 || 500 - 607.71 || N/A || N/A 
   ||   ||   ||   ||   ||   
 Annual travel costs || N/A || N/A || N/A || N/A || Yes 
   ||   ||   ||   ||   ||   
 Transfers to Member State: ||   ||   ||   ||   ||   
 Education allowance* % of salary* % of salary with no cc || Yes 5% max 25% || Yes 5% max 25% || Yes 5% max 25% || Yes 5% max 25% || Yes 5% max 25% 
 Representation expenses || reimbursed || reimbursed || reimbursed || N/A || N/A 
   ||   ||   ||   ||   ||   
 Taking up duty: ||   ||   ||   ||   ||   
 Installation expenses   Family travel expenses Moving expenses || 50 703.52   reimbursed reimbursed || 45 927.10 –47 764.18 reimbursed reimbursed || 36 741.68 – 41 334.40 reimbursed reimbursed || 39 681.02 – 42 252.94 reimbursed reimbursed || reimbursed   reimbursed reimbursed 
 Leaving office: ||   ||   ||   ||   ||   
 Resettlement expenses   Family travel expenses Moving expenses Transition (% salary)** Sickness insurance || 25 351.76   reimbursed reimbursed 40% - 65% covered || 22 963.55 –23 882.09 reimbursed reimbursed 40% - 65% covered || 18 370.84 – 20 667.20 reimbursed reimbursed 40% - 65% covered || 19 840.51 – 21 126.47 reimbursed reimbursed 40% - 65% covered || reimbursed   reimbursed reimbursed N/A optional 
 Pension (% salary, before tax) || Max 70% || Max 70% || Max 70% || Max 70% || Max 70% 
   ||   ||   ||   ||   ||   
 Deductions: ||   ||   ||   ||   ||   
 Community tax Sickness insurance (% salary) Special levy on salary Pension deduction || 8% - 45% 1.8% 5.5% N/A || 8% - 45% 1.8% 5.5% N/A || 8% - 45% 1.8% 5.5% N/A || 8% - 45% 1.8% 5.5% N/A || 8% - 45% 1.8% 5.5% 11.6% 
 Number of persons at year-end || 3 || 8 || 91 || 27 || 109 
*
with correction coefficient (“cc”) applied
**
paid for the first 3 years following departure
              10. EVENTS AFTER THE BALANCE SHEET DATE
At the date of signing of these
accounts no material issues had come to the attention of the Accounting Officer
of the Commission or were reported to him that would require separate
disclosure under this section. The annual accounts and related notes were
prepared using the most recently available information and this is reflected in
the information presented.
              11. SCOPE OF CONSOLIDATION
11.1 CONSOLIDATED ENTITIES
 A. CONTROLLED ENTITIES (51) 
 1. Institutions and consultative bodies (11) ||   
 European Parliament || European Data Protection Supervisor 
 European Council || European Economic and Social Committee 
 European Commission || European Ombudsman 
 Committee of the Regions || European Court of Auditors 
 Court of Justice of the European Union || Council of the European Union 
 European External Action Service ||   
   ||   
 2. EU Agencies (38)     ||   
 2.1. Executive Agencies (6) ||   
 Education, Audiovisual & Culture Executive Agency || Executive Agency for Competitiveness and Innovation 
 Executive Agency for Health and Consumers || Trans-European Transport Network Executive Agency 
 Research Executive Agency || European Research Council Executive Agency 
   ||   
 2.2. Decentralised Agencies (32) ||   
 European Maritime Safety Agency || European Food Safety Authority 
 European Medicines Agency || European Railway Agency 
 European GNSS Supervisory Authority || Community Plant Variety Office 
 European Chemicals Agency || European Fisheries Control Agency 
 Fusion for Energy (European Joint Undertaking for ITER and the Development of Fusion Energy) || European Monitoring Centre for Drugs and Drug Addiction 
 Eurojust || European Police College (CEPOL) 
 European Institute for Gender Equality || European Police Office (EUROPOL) 
 European Agency for Safety and Health at Work || European Aviation Safety Agency 
 European Centre for Disease Prevention and Control || European Network and Information Security Agency 
 European Environment Agency || European Union Agency for Fundamental Rights 
 European Centre for the Development of Vocational training || European Insurance and Occupational Pensions Authority 
 European Agency for Cooperation of Energy Regulators || Translation Centre for the Bodies of the European Union 
 European Banking Authority || European Securities and Markets Authority 
 European Asylum Support Office* || European Training Foundation 
 Office for the Body of European Regulators for Electronic Communication || European Foundation for the Improvement of Living and Working Conditions 
 European Agency for the Management of Operational Co-operation at External Borders of the Member States of the EU || EU Office for Harmonisation in the Internal Market (Trade Marks and Designs) 
 3. Other controlled entities (2) ||   
 European Coal and Steel Community (in liquidation) || European Institute of Innovation and Technology 
   ||   
 B. JOINT VENTURES (5) 
 ITER International Fusion Energy Organisation || Galileo Joint Undertaking in liquidation 
 SESAR Joint Undertaking || IMI Joint Undertaking 
 FCH Joint Undertaking ||   
   ||   
 C. ASSOCIATES (4) 
 European Investment Fund || ARTEMIS Joint Undertaking 
 Clean Sky Joint Undertaking || ENIAC Joint Undertaking 
 *  Consolidated for the first time in 2012 
11.2    NON-CONSOLIDATED
ENTITIES
Although the EU manages the assets
of the below mentioned entities, they do not meet the requirements to be
consolidated and so are not included in the EU accounts.

11.2.1   The European Development Fund (EDF)
The European Development Fund (EDF)
is the main instrument for providing EU aid for development cooperation to the
African, Caribbean and Pacific (ACP) States and Overseas Countries and
Territories (OCTs). The 1957 Treaty of Rome made provision for its creation
with a view to granting technical and financial assistance, initially limited
to African countries with which some Member States had historical links.
The EDF is not funded from the EU’s
budget but from direct contributions from the Member States, which are agreed
in negotiations at intergovernmental level. The Commission and the EIB manage
the resources of the EDF. Each EDF is usually concluded for a period of around
five years. Since the conclusion of the first partnership convention in 1964, the
EDF programming cycles have generally followed the partnership
agreement/convention cycles.
The EDF is governed by its own
Financial Regulation (OJ L 78 of 19/03/2008) which foresees the presentation of
its own financial statements, separately from those of the EU. The EDF annual
accounts and resource management are subject to the external control of the European
Court of Auditors and the European Parliament. For information purposes, the
balance sheet and the statement of financial performance of the 8th,
9th and 10th EDFs are shown below:
 BALANCE SHEET – 8th, 9th and 10th EDFs 
   ||   ||   || EUR millions 
   || 31.12.2012 || 31.12.2011 
 Non-current assets || 438 || 380 
 Current assets || 2 094 || 2 510 
 TOTAL ASSETS || 2 532 || 2 890 
 Current liabilities || (1 057) || (1 033) 
 Non-current liabilities || (40) || - 
 TOTAL LIABILITIES || (1 097) || (1 033) 
   ||   ||   
 NET ASSETS || 1 435 || 1 857 
   ||   ||   
 FUNDS & RESERVES ||   ||   
 Called fund capital || 29 579 || 26 979 
 Other reserves || 2 252 || 2 252 
 Economic result carried forward from previous years || (27 374) || (24 674) 
 Economic result of the year || (3 023) || (2 700) 
 NET ASSETS || 1 435 || 1 857 
 STATEMENT OF FINANCIAL PERFORMANCE – 8th, 9th and 10th EDFs 
   ||   ||   || EUR millions 
   || 2012 || 2011 
 Operating revenue || 124 || 99 
 Operating expenses || (3 017) || (2 702) 
 Administrative expenses || (107) || (75) 
 DEFICIT FROM OPERATING ACTIVITIES || (3 001) || (2 679) 
 Financial activities || (22) || (21) 
 ECONOMIC RESULT OF THE YEAR || (3 023) || (2 700) 
11.2.2   The Sickness Insurance Scheme
The Sickness Insurance Scheme is
the scheme that provides medical assurance to the staff of the various EU
bodies. The funds of the Scheme are its own property and are not controlled by
the EU, although its financial assets are managed by the Commission. The Scheme
is funded by contributions from its members (staff) and from the employers (the
Institutions/Agencies/Bodies.) Any surplus remains within the scheme.

The scheme has four separate entities – the main scheme covering staff of the
Institutions, Agencies of the EU, and three smaller schemes covering staff in
the European University Institute, the European schools and staff working
outside the EU such as staff in the EU delegations. The total assets of the
Scheme at 31 December 2012 totalled EUR 296 million (2011: EUR 294 million).

11.2.3   The Participants Guarantee Fund (PGF)
Certain pre-financing amounts paid
out under the 7th Research Framework Programme for research and
technological development (FP7) are effectively covered by a Participants
Guarantee Fund (PGF) - the amount of pre-financing paid out in 2012 totalled
EUR 4 billion (2011: EUR 3.3 billion). This fund is a separate entity from the
European Commission and is not consolidated in these accounts.
The PGF is a mutual benefit
instrument set up to cover the financial risks incurred by the EU and the
participants during the implementation of the indirect actions of FP7, its
capital and interests constituting a performance security. All participants of
indirect actions taking the form of a grant contribute 5% of the total EU
contribution to the PGF's capital for the duration of the action. As such the
participants are the owners of the PGF, the EU (represented by the Commission)
acting as their executive agent. At the end of an indirect action, participants
shall recover their contribution to the capital in full, except where the PGF
incurs losses due to defaulting beneficiaries – in this case participants shall
recover, at a minimum, 80% of their contribution. The PGF thus guarantees the
financial interest of both the EU and the participants. 
As at 31 December 2012 the PGF had
total assets of EUR 1 452 million (2011: EUR 1 171 million). The funds of the
PGF are its own property and are not controlled by the EU, and its financial
assets are managed by the EIB.
EUROPEAN UNION
AGGREGATED
REPORTs on THE IMPLEMENTATION OF
THE budgEt AND EXPLANATORY NOTES*
FINANCIAL YEAR 2012
              * It should be noted
that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to
add-up.

              CONTENTS
Page
PART II: AGGREGATED
REPORTS ON THE IMPLEMENTATION 
OF THE BUDGET AND EXPLANATORY NOTES
1. Result
of implementation of the EU budget and explanatory notes:
      1.1 EU Budget result                                                                                      90
      1.2 Reconciliation of Economic
result with Budget result                                       90
      1.3 Statement of Comparison of
Budget and Actual Amounts                                 91
Aggregated reports on the
implementation of the budget                                                   
      2. Revenue: Summary of the implementation of budget revenue                          102
      3. Expenditure:
      3.1 Breakdown and changes in commitment and payment
appropriations by
financial framework heading                                                                           103
      3.2 Implementation of commitment appropriations by
financial framework heading    103
      3.3 Implementation of payment appropriations by
financial framework heading         104
      3.4 Movement in commitments
outstanding by financial framework heading             105
      3.5 Breakdown of commitments
outstanding by year of origin by financial framework
          heading                                                                                                  105
      3.6. Breakdown and changes in commitment and payment
appropriations by
         policy area                                                                                              106
      3.7 Implementation of commitment appropriations by
policy area                          107
      3.8 Implementation of payment appropriations by
policy area                               108
      3.9 Movement in commitments
outstanding by policy area                                   109
      3.10 Breakdown of commitments
outstanding by year of origin by policy area          110
        4. Institutions and
Agencies:
      4.1 Summary of the implementation
of budget revenue by Institution                    111
      4.2 Implementation of commitment
and payment appropriations by Institution         112
      4.3 Agency income: budget forecasts, entitlements and amounts
received             113
      4.4 Commitment and payment
appropriations by Agency                                     114
      4.5 Budget result including
Agencies                                                                115
        
RESULT OF IMPLEMENTATION OF THE EU BUDGET
 || 1.1 EU BUDGET RESULT || EUR millions 
   || 2012 || 2011 || 
 Revenue for the financial year || 139 541 || 130 000 || 
 Payments against current year appropriations || (137 738) || (128 043) || 
 Payment appropriations carried over to year N+1 || (936) || (1 019) || 
 Cancellation of unused payment appropriations carried over from year N-1 || 92 || 457 || 
 Exchange differences for the year || 60 || 97 || 
 Budget result* || 1 019 || 1 492 || 
* Of which EFTA
result is EUR (4) million in 2012 and EUR (5) million in 2011.
The budget surplus for
the EU (EUR 1 023 million) is returned to the Member States during the
following year through deduction of their amounts due for that year.
1.2 RECONCILIATION OF
ECONOMIC RESULT WITH BUDGET RESULT
EUR millions
   || 2012 || 2011 
 ECONOMIC RESULT OF THE YEAR || (5 329) || (1 789) 
   ||   ||   
 Revenue ||   ||   
 Entitlements established in current year but not yet collected || (2 000) || (371) 
 Entitlements established in previous years and collected in current year || 4 582 || 2 072 
 Accrued revenue (net) || (38) || (236) 
 Expenses ||   ||   
 Accrued expenses (net) || (1 933) || 3 410 
 Expenses prior year paid in current year || (2 695) || (936) 
 Net-effect pre-financing || 1 210 || 1 131 
 Payment appropriations carried over to next year || (4 666) || (1 211) 
 Payments made from carry-overs & cancellation of unused payment appropriations || 4 768 || 2 000 
 Movement in provisions || 7 805 || (2 109) 
 Other || (670) || (378) 
 Economic result Agencies and ECSC || (15) || (91) 
   ||   ||   
 BUDGET RESULT OF THE YEAR || 1 019 || 1 492 
1.3 STATEMENT OF
COMPARISON OF BUDGET AND ACTUAL AMOUNTS
 1.3.1 REVENUE ||   ||   || EUR millions || 
   || Initial Budget || Final Budget || Actual Revenue || 
 1. Own resources || 127 512 || 128 655 || 128 886 || 
    Of which Customs duties || 19 171 || 16 701 || 16 261 || 
    Of which VAT || 14 499 || 14 546 || 14 648 || 
    Of which GNI || 93 719 || 97 284 || 97 856 || 
 3. Surpluses, balances and adjustments || 0 || 1 994 || 2 041 || 
 4. Revenue accruing from persons working with the institutions and with other Union bodies || 1 312 || 1 312 || 1 236 || 
 5. Revenue accruing from the administrative operation of the institutions || 60 || 68 || 612 || 
 6. Contributions and refunds in connection with Union agreements and programmes || 50 || 50 || 2 928 || 
 7. Interest on late payments and fines || 123 || 3 648 || 3 807 || 
 8. Borrowing and lending operations || 0 || 0 || 0 || 
 9. Miscellaneous revenue || 30 || 30 || 31 || 
 Total || 129 088 || 135 758 || 139 541 || 
 1.3.2 COMMITMENTS BY FINANCIAL FRAMEWORK HEADING EUR millions ||   
   || Initial Budget || Final Budget* || Commitments || 
 1. Sustainable growth || 67 506 || 70 842 || 69 000 || 
 2. Preservation & mgt of natural resources || 59 976 || 62 198 || 60 817 || 
 3. Citizenship, freedom, security, justice || 2 065 || 2 994 || 2 892 || 
 4. The EU as a global player || 9 406 || 9 931 || 9 753 || 
 5. Administration || 8 280 || 9 113 || 8 822 || 
 6. Compensations || 0 || 0 || 0 || 
 Total || 147 232 || 155 077 || 151 284 || 
 1.3.3 COMMITMENTS BY POLICY AREA || EUR millions || 
   || Initial Budget || Final Budget* || Commitments || 
 01 Economic and financial affairs || 611 || 536 || 535 || 
 02 Enterprise || 1 148 || 1 276 || 1 236 || 
 03 Competition || 92 || 96 || 94 || 
 04 Employment and social affairs || 11 581 || 11 818 || 11 782 || 
 05 Agriculture and rural development || 58 587 || 60 877 || 59 514 || 
 06 Mobility and transport || 1 664 || 1 754 || 1 713 || 
 07 Environment and Climate action || 493 || 508 || 496 || 
 08 Research || 5 930 || 7 618 || 7 059 || 
 09 Information society and media || 1 678 || 1 985 || 1 878 || 
 10 Direct research || 411 || 932 || 494 || 
 11 Maritime affairs and Fisheries || 1 033 || 1 011 || 1 007 || 
 12 Internal market || 101 || 107 || 101 || 
 13 Regional policy || 42 045 || 42 662 || 42 647 || 
 14 Taxation and customs union || 143 || 147 || 144 || 
 15 Education and culture || 2 697 || 3 292 || 3 088 || 
 16 Communication || 262 || 271 || 265 || 
 17 Health and consumer protection || 687 || 653 || 639 || 
 18 Home affairs || 1 264 || 1 322 || 1 290 || 
 19 External relations || 4 817 || 4 969 || 4 872 || 
 20 Trade || 104 || 106 || 104 || 
 21 Development and relations with ACP States || 1 498 || 1 733 || 1 719 || 
 22 Enlargement || 1 088 || 1 166 || 1 135 || 
 23 Humanitarian aid || 900 || 1 299 || 1 294 || 
 24 Fight against fraud || 79 || 79 || 79 || 
 25 Commission's policy coordination & legal advice || 194 || 204 || 196 || 
 26 Commission’s administration || 1 017 || 1 200 || 1 149 || 
 27 Budget || 69 || 63 || 61 || 
 28 Audit || 12 || 12 || 12 || 
 29 Statistics || 134 || 144 || 135 || 
 30 Pensions and related expenditure || 1 335 || 1 321 || 1 318 || 
 31 Language Services || 399 || 477 || 435 || 
 32 Energy 33 Justice || 718 218 || 764 233 || 731 222 || 
 40 Reserves 90 Other Institutions || 759 3 464 || 461 3 983 || 0 3 841 || 
 Total || 147 232 || 155 077 || 151 284 || 
* Including amending budgets, appropriations carried
  over and assigned revenue.
1.3.4 EXPENDITURE BY FINANCIAL
  FRAMEWORK HEADING
EUR millions
   || Initial Budget || Final Budget* || Payments made || 
 1. Sustainable growth || 55 337 || 63 753 || 61 585 || 
 2. Preservation & management of natural resources || 57 034 || 60 409 || 59 096 || 
 3. Citizenship, freedom, security and justice || 1 484 || 2 477 || 2 375 || 
 4. The EU as a global player || 6 955 || 7 182 || 7 064 || 
 5. Administration || 8 278 || 9 824 || 8 564 || 
 6. Compensations || 0 || 0 || 0 || 
 Total || 129 088 || 143 644 || 138 683 || 
1.3.5 EXPENDITURE BY POLICY AREA
   || EUR millions   
   || Initial Budget || Final Budget* || Payments made 
 01 Economic and financial affairs || 511 || 493 || 484 
 02 Enterprise || 1 079 || 1 395 || 1 271 
 03 Competition || 92 || 103 || 92 
 04 Employment and social affairs || 9 075 || 11 755 || 11 699 
 05 Agriculture and rural development || 55 880 || 59 242 || 57 948 
 06 Mobility and transport || 1 079 || 1 156 || 1 105 
 07 Environment and Climate action || 393 || 409 || 382 
 08 Research || 4 218 || 6 245 || 5 307 
 09 Information society and media || 1 357 || 1 776 || 1 501 
 10 Direct research || 404 || 893 || 466 
 11 Maritime affairs and Fisheries || 806 || 757 || 745 
 12 Internal market || 98 || 112 || 99 
 13 Regional policy || 35 538 || 38 282 || 38 254 
 14 Taxation and customs union || 110 || 140 || 130 
 15 Education and culture || 2 112 || 3 059 || 2 761 
 16 Communication || 253 || 278 || 256 
 17 Health and consumer protection || 592 || 652 || 635 
 18 Home affairs || 756 || 860 || 835 
 19 External relations || 3 276 || 3 271 || 3 233 
 20 Trade || 102 || 111 || 105 
 21 Development and relations with ACP States || 1 310 || 1 475 || 1 429 
 22 Enlargement || 921 || 976 || 943 
 23 Humanitarian aid || 842 || 1 141 || 1 128 
 24 Fight against fraud || 74 || 83 || 71 
 25 Commission's policy coordin. & legal advice || 193 || 219 || 195 
 26 Commission’s administration || 1 001 || 1 343 || 1 149 
 27 Budget || 69 || 73 || 61 
 28 Audit || 12 || 13 || 12 
 29 Statistics || 122 || 148 || 128 
 30 Pensions and related expenditure || 1 335 || 1 321 || 1 318 
 31 Language Services || 399 || 501 || 433 
 32 Energy || 1 339 || 782 || 723 
 33 Justice || 187 || 206 || 190 
 40 Reserves || 90 || 0 || 0 
 90 Other Institutions || 3 464 || 4 376 || 3 596 
 Total || 129 088 || 143 644 || 138 683 
* Including amending budgets, appropriations carried over and assigned
revenue.
In the initial adopted budget,
signed by the President of the European Parliament on 1 December 2011, the
amount of payment appropriations was EUR 129 088 million and the amount to be
financed by own resources totalled EUR 127 512 million. The revenue and
expenditure estimates in the initial budget are typically adjusted during the
budgetary year, such modifications being presented in amending budgets.
Adjustments in the GNI-based own resources ensure that budgeted revenue matches
exactly budgeted expenditure. In accordance with the principle of equilibrium,
budget revenue and expenditure (payment appropriations) must be in balance.
Revenue:
During 2012 six amending budgets
were adopted. Taking them into account, the total final revenue in the 2012
budget amounted to EUR 135 758 million. This was financed by own resources
totalling EUR 128 655 million (thus EUR 1 143 million more than
initially forecasted) and the remainder by other revenue. The increased need
for financing payment appropriations was covered mainly from the inclusion of
EUR 3 525 million relating to fines and interest on late payments in the
Amending Budget No. 6/2012 under other revenue.
As far as the own resources result
is concerned, the collection of traditional own resources was close to the
forecasted amounts. Namely because the budget estimates that were modified at
the time the Amending Budget No. 4/2012 was established (they were decreased by
EUR 1 520 million according to the new macroeconomic forecasts of spring 2012),
were once again amended in the Amending Budget No. 6/2012 to take into account
the actual rhythm of collection. Thus they were once again decreased by EUR 950
million.
The final Member States' VAT and
GNI payments also correspond closely to the final budgetary estimate. The
differences between the forecasted amounts and the amounts actually paid are
due to the differences between the euro rates used for budgetary purposes and
the rates in force at the time when the Member States outside the EMU actually
made their payments.
Expenditure:
The year 2012 was the sixth and
penultimate year of the current programming period 2007-2013. All major programmes
were at cruising speed, and the inflow of payment claims increased
significantly, as is normal as the cycle draws to a close. In the general
context of fiscal consolidation in the Member States, the voted budget for 2012
was rather conservative. This, combined with a significant amount of unpaid
payment claims from 2011, and the mounting requests for reimbursements, created
a high pressure on payment appropriations, which had to be addressed during the
year through careful budgetary management, and ultimately through an amending
budget.
For commitments, the
authorised budget, and hence the political targets set, were fully implemented
(99.6%). The most notable adjustments by means of amending budgets during the
year concerned increases of EUR 650 million for ITER, in line with the December
2011 agreement on its financing, and EUR 688 million for the mobilisation of
the European Union Solidarity Fund, unforeseeable expenditure by its very
nature. Commitments were reduced by EUR 142 million in Amending Budget 6/2012,
by returning unused amounts to the margin, in particular in relation to the
reserve for international fisheries agreements, and animal disease eradication
and monitoring programmes.
The total level of payment
appropriations was increased at the end of the year through Amending Budget
6/2012 for an amount EUR 6 billion, increasing the initial budget by 4.8%. The
shortage of payments affected nearly all headings, and in particular heading 1b
Cohesion for Growth and Employment. It must also be recalled that the
EUR 6 billion agreed was EUR 3 billion less that the amount
requested by the Commission. Finally, the year 2012 ended with outstanding
payment claims of EUR 16.2 billion for the current programming period of
Cohesion Policy (2007-2013), and a further EUR 1.1 billion related to the
closure of 2000-2006 programmes. These amounts will need to be paid in 2013. As
in the case of commitments, the budget line for the European Union Solidarity
Fund was reinforced by EUR 688 million in payment appropriations during the
course of the year. The unused voted payment appropriations amounted to EUR 1
102 million (2011: EUR 1 582 million) and after the carryover to 2013, a total
of EUR 166 million (2011: EUR 562 million) lapses.
A more detailed
analysis of budgetary adjustments, their relevant context, their justification
and their impact is presented in Commission's Report on Budgetary and Financial
Management 2012, Part A "Overview at budget level" and Part B dealing
with each heading
of the multi-annual financial framework.
EXPLANATORY NOTES ON THE IMPLEMENTATION OF THE
EU BUDGET
1. General overview
The budgetary accounts are kept in
accordance with Regulation (EU, Euratom) No 966/2012 of the European Parliament
and of the Council of 25 October 2012 (OJ L 298 of 26 October 2012), on the
financial rules applicable to the general budget of the Union (hereinafter
referred to as the 'Financial Regulation') and Commission Delegated Regulation
(EU) No 1268/2012 of 29 October 2012 laying down detailed rules of
application of this Financial Regulation.The general budget, the main
instrument of the Union's financial policy, is the instrument which provides
for and authorises the Union's revenue and expenditure every year.
Every year, the Commission
estimates all the Institutions' revenue and expenditure for the year and draws
up a draft budget which it sends to the budgetary authority. On the basis of
this draft budget, the Council draws its position which is then the subject of
negotiations between the two arms of the budgetary authority. The President of
Parliament declares that the joint draft has been finally adopted making the
budget enforceable. The task of executing the budget is mainly the
responsibility of the Commission.
The budget structure consists
for the Commission of administrative and operational appropriations. The other
Institutions have only administrative appropriations. Furthermore, the budget
distinguishes between two types of appropriation: non-differentiated
appropriations and differentiated appropriations. Non-differentiated
appropriations are used to finance operations of an annual nature (which comply
with the principle of annuality). Differentiated appropriations were introduced
in order to reconcile the principle of annuality with the need to manage
multi-annual operations. They are intended to cover mainly multi-annual
operations. Differentiated appropriations are split into commitment and payment
appropriations:
–      
commitment
appropriations: cover the total cost of the legal obligations entered into for the
current financial year for operations extending over a number of years.
However, budgetary commitments for actions extending over more than one
financial year may be broken down over several years into annual instalments
where the basic act so provides.
–      
payment
appropriations: cover expenditure arising from commitments entered into in the
current financial year and/or earlier financial years.
Origin of
Appropriations
The main source of appropriations
is the Union's budget for the current year. However, there are other types of
appropriations resulting from the provisions of the Financial Regulation. They
come from previous financial years or outside sources:
–      
Initial
budget appropriations adopted for the current year can be supplemented with transfers
between lines and by amending budgets.
–      
Appropriations
carried over from previous year or made available again also supplement the
current budget. These are (i) non-differentiated payment appropriations which
may be carried over automatically for one financial year only; (ii) appropriations
carried over by decision of the Institutions in one of two cases: if the
preparatory stages have been completed or if the legal base is adopted late. Appropriations
made available again as a result of decommitments: This involves the re-entry
of commitment appropriations concerning structural funds which have been
decommitted. Amounts can be re-entered by way of exception in the event of
error by the Commission or if they are indispensable for completion of the
programme.
–      
Assigned
revenue
which is made up of 
–      
(i)
refunds where the amounts are assigned revenue on the budget line which
incurred the initial expenditure and may be carried over without limit; 
–      
(ii)
EFTA appropriations: The agreement on the European Economic Area (EEA) provides
for financial contribution by its members to certain activities in the EU
budget. The budget lines concerned and the amounts projected are published in
Annex III of the EU budget. The lines concerned are increased by the EFTA
contribution. Appropriations not used at the year-end are cancelled and
returned to the EEA countries; 
–      
(iii)
Revenue from third parties/ other countries that have concluded agreements with
the EU involving a financial contribution to EU activities. The amounts
received are considered to be revenue from third parties which is allocated to
the budget lines concerned (often in the field of research) and may be carried
over without limit; 
–      
(iv)
Work for third parties: As part of their research activities, the EU research
centres may work for outside bodies. Like the revenue from third parties, the
work for third parties is assigned to specific budget lines and may be carried
over without limit; and 
–      
(v)
Appropriations made available again as a result of repayment of payments on
account: These are EU funds which have been repaid by the beneficiaries and may
be carried over without limit.
Composition of
Appropriations Available
–      
Initial
budget = appropriations voted in December of year N-1;
–      
Final
budget appropriations = initial budget appropriations adopted + amending budget
appropriations + transfers + additional appropriations;
–      
Additional
appropriations = assigned revenue (see above) + appropriations carried over from the
previous financial year or made available again following decommitments.
1.1      BUDGET
RESULT FOR THE YEAR
The amounts of own resources
entered in the accounts are those credited in the course of the year to the
accounts opened in the Commission's name by the governments of the Member
States. Revenue comprises also, in the case of a surplus, the budget result for
the previous financial year. The other revenue entered in the accounts is the
amount actually received in the course of the year.
For the purposes of calculating the
budget result for the year, expenditure comprises payments made against the
year's appropriations for payments plus any of the appropriations for that year
that are carried over to the following year. Payments made against the year's
appropriations for payments means payments that are made by the accounting
officer by 31 December of the financial year. In the case of the European
Agricultural Guarantee Fund, the payments are those effected by the Member
States between 16 October N-1 and 15 October N, provided that the accounting
officer was notified of the commitment and authorisation by 31 January N+1.
EAGF expenditure may be subject to a conformity decision following controls in
the Member States.
The budget result comprises two
elements: the result of the EU and the result of the participation of the EFTA
countries belonging to the EEA. In accordance with Article 15 of Regulation No
1150/2000 on own resources, this result represents the difference between:
–      
total
revenue received for that year;
–      
and
total payments made against that year's appropriations plus the total amount of
that year's appropriations carried over to the following year.
The following are added to or
deducted from the resulting figure:
–      
the
net balance of cancellations of payment appropriations carried over from
previous years and any payments which, because of fluctuations in the euro
rate, exceed non-differentiated appropriations carried over from the previous
year;
–      
the
balance of exchange-rate gains and losses recorded during the year.
The budget result is returned to
the Member States the following year through deduction of their amounts due for
that financial year.
Appropriations carried over from
the previous financial year in respect of contributions by and work for third
parties, which by definition never lapse, are included with the additional
appropriations for the financial year. This explains the difference between
carryovers from the previous year in the 2012 budget implementation statements
and those carried over to the following year in the 2011 budget implementation
statements. The payment appropriations for re-use and appropriations
made available again following the repayment of payments on account are
disregarded when calculating the result for the year.
The payment
appropriations carried over include: automatic carryovers and carryovers by
decision. The cancellation of unused payment appropriations carried over from
the previous year shows the cancellations on appropriations carried over
automatically and by decision. It also includes the decrease in assigned
revenue appropriations carried over to the next year in comparison with 2011. 
1.2      RECONCILIATION
OF THE ECONOMIC RESULT WITH THE BUDGET RESULT
The economic result of the year is
calculated on the basis of accrual accounting principles. The budget result is
however based on modified cash accounting rules, in accordance with the
Financial Regulation. As both are the result of the same underlying
transactions, it is a useful control to ensure that they are reconcilable. The
table below shows this reconciliation, highlighting the key reconciling
amounts, split between revenue and expenditure items.
Reconciling items - Revenue
The actual budgetary
revenue for a financial year corresponds to the revenue collected from
entitlements established in the course of the year and amounts collected from
entitlements established in previous years. Therefore the entitlements
established in the current year but not yet collected are to be deducted
from the economic result for reconciliation purposes as they do not form part
of budgetary revenue. On the contrary the entitlements established in
previous years and collected in current year must be added to the economic
result for reconciliation purposes. 
The net accrued
revenue mainly consists of accrued revenue for agricultural levies, own
resources and interests and dividends. Only the net-effect, i.e. accrued
revenue for current year minus reversal accrued revenue from previous year, is
taken into consideration.  
Reconciling items - Expenditure 
The net accrued
expenses mainly consist of accruals made for year-end cut-off purposes,
i.e. eligible expenses incurred by beneficiaries of Community funds but not yet
reported to the Commission. 
While accrued expenses
are not considered as budgetary expenditure, the payments made in the current
year relating to invoices registered in prior years are part of current
year's budgetary expenditure. 
The net effect of
pre-financing is the combination of (1) the new pre-financing amounts paid
in the current year and recognised as budgetary expenditure of the year and (2)
the clearing of the pre-financing paid in current year or previous years
through the acceptance of eligible costs. The latter represent an expense in
accrual terms but not in the budgetary accounts since the payment of the
initial pre-financing had already been considered as a budgetary expenditure at
the time of its payment. 
Besides the
payments made against the year's appropriations, the appropriations for that
year that are carried to the next year also need to be taken into
account in calculating the budget result for the year (in accordance with
Article 15 of Regulation No 1150/2000). The same applies for the budgetary
payments made in the current year from carry-overs and the cancellation of
unused payment appropriations.
The movement
in provisions relates to year-end estimates made in the accrual accounts
(employee benefits mainly) that do not impact the budgetary accounts. Other
reconciling amounts comprise different elements such as asset depreciation,
asset acquisitions, capital lease payments and financial participations for
which the budgetary and accrual accounting treatments differ. 
2. BUDGETARY
IMPLEMENTATION REPORTS: REVENUE
The budgetary
implementation reports are presented following these explanatory notes.
The vast majority of revenue comes
from own resources. This is laid down in Article 311 of the Treaty on the
Functioning of the EU, which states that: "Without prejudice to other
revenue, the budget shall be financed wholly from own resources." The main
bulk of budgetary expenditure is financed by own resources. Other revenue
represents only a minor part of total financing.
Own resources can be divided into
the following categories:
(1)              
Traditional
own resources (TOR) consist of customs duties and sugar levies. These own
resources are levied on economic operators and collected by Member States on
behalf of the EU. However, Member States keep 25% as a compensation for their
collection costs. Customs duties are levied on imports of products coming from
third countries, at rates based on the Common Customs Tariff. Sugar levies are
paid by sugar producers to finance the export refunds for sugar. TOR usually
account for +/- 13% of own resource revenue.
(2)              
The
own resource based on value added tax (VAT) is levied on Member States' VAT
bases, which are harmonised for this purpose in accordance with EU rules. The
same percentage is levied on the harmonised base of each Member State. However,
the VAT base to take into account is capped at 50% of each Member State’s GNI.
The VAT-based resource usually accounts for around 12% of own resource revenue.
(3)              
The
resource based on gross national income (GNI) is used to balance budget revenue
and expenditure, i.e. to finance the part of the budget not covered by any
other sources of revenue. The same percentage rate is levied on each Member
States' GNI, which is established in accordance with EU rules. The GNI-based
resource usually accounts for +/- 75% of own resource revenue.
The allocation of own
resources is made in accordance with the rules laid down in the Council
Decision No. 2007/436/EC, Euratom of 7 June 2007 on the system of the European
Communities' own resources (ORD 2007). On 1 March 2009 the ORD 2007 entered
into force. However it took effect on 1 January 2007. Consequently the
retroactive effects have been taken in account in the budgetary year 2009.
2.1      Traditional own resources
Traditional own
resources: All established amounts of traditional own resources must be entered
in one or other of the accounts kept by the competent authorities.
–          In the ordinary account provided for in Article 6(3)(a)
of Regulation No 1150/2000: all amounts recovered or guaranteed.
–          In the separate account provided for in Article 6(3)(b)
of Regulation No 1150/2000: all amounts not yet recovered and/or not
guaranteed; amounts guaranteed but challenged may also be entered in this
account.
For the separate
account, the Member States quarterly statement to the Commission includes:
–          the balance
to be recovered during the previous quarter,
–          the
established entitlements during the quarter in question,
–          rectifications
of the base (corrections/cancellations) during the quarter in question,
–          amounts written off (which cannot be made
available according to Article 17(2) of Regulation 1150/2000),
–          the amounts
recovered during the quarter in question,
–          the balance
to be recovered at the end of the quarter in question.
Traditional own
resources must be entered in the Commission's account with the Treasury or the
body appointed by the Member State at the latest on the first working day
following the 19th day of the second month following the month during which the
entitlement was established (or recovered in the case of the separate account).
Member States retain, by way of collection costs, 25% of traditional own
resources. The contingent own resources entitlements are adjusted on the basis
of the likelihood of their recovery.
2.2      VAT-based
resources and GNI-based resources
VAT-based own resources
derive from the application of a uniform rate, for all Member States, to the
harmonised VAT base determined in accordance with the rules of Article 2(1)(b)
of the ORD 2007. The uniform rate is fixed at 0.30% except for the period
2007-2013 in which the rate of call for Austria is fixed at 0.225, for Germany
at 0.15% and for Netherlands and Sweden at 0.10%. The VAT base is capped at 50%
of GNI for all Member States.
The GNI-based resource
is a variable resource intended to supply the revenue required, in any given
year, to cover expenditure exceeding the amount collected from traditional own
resources, VAT resources and miscellaneous revenue. The revenue derives from
the application of a uniform rate to the aggregate GNI of all the Member
States. VAT and GNI-based resources are determined on the basis of forecasts of
VAT and GNI bases made when the draft budget is being prepared. These forecasts
are subsequently revised; the figures are updated during the budget year in
question by means of an amending budget.
The actual figures for
the VAT and GNI bases are available in the course of the year following the
budget year in question. The Commission calculates the differences between the
amounts due by the Member States by reference to the actual bases and the sums
actually paid on the basis of the (revised) forecasts. These VAT and GNI
balances, either positive or negative, are called in by the Commission from the
Member States for the first working day of December of the year following the
budget year in question. Corrections may still be made to the actual VAT and
GNI bases during the subsequent four years, unless a reservation is issued. The
balances calculated earlier are adjusted and the difference is called in at the
same time as the VAT and GNI balances for the previous budget year.
When conducting
controls of VAT statements and GNI data, the Commission may notify reservations
to the Member States regarding certain points which may have consequences to
their own resources contributions. These points, for example, may result from
an absence of acceptable data, or a need to develop a suitable methodology.
These reservations have to be seen as potential claims on the Member States for
uncertain amounts as their financial impact cannot be estimated with accuracy.
When the exact amount can be determined, the corresponding VAT and GNI-based
resources are called either in connection with VAT and GNI balances or by
individual calls for funds.
2.3      UK
correction
This mechanism reduces the own
resources payments of the UK in proportion to what is known as its
"budgetary imbalance" and increases the own resources payments of the
other Member States correspondingly. The budgetary imbalance correction
mechanism in favour of the United Kingdom was instituted by the European Council
in Fontainebleau (June 1984) and the resulting Own Resources Decision of 7 May
1985. The purpose of the mechanism was to reduce the budgetary imbalance of the
UK through a reduction in its payments to the EU. Germany, Austria, Sweden and
Netherlands benefit from a reduced financing of the correction (restricted to
one fourth of their normal share).
2.4      Gross
reduction
The European Council of 15 and 16
December 2005 concluded that the Netherlands and Sweden shall benefit from
gross reductions in their annual GNI-based contributions during the period
2007-2013. Thus this mechanism of compensation stipulates that the Netherlands
shall benefit from a gross reduction in its annual GNI contribution of EUR 605
million and Sweden from a gross reduction in its annual GNI contribution of EUR
150 million, measured in 2004 prices.     
3.        BUDGETARY
IMPLEMENTATION REPORTS: EXPENDITURE
The budgetary implementation
reports can be found after these explanatory notes.
3.1      Financial
Framework 2007-2013
   || EUR millions 
   || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || 2013 
 1. Sustainable Growth || 53 979 || 57 653 || 61 696 || 63 555 || 63 974 || 67 614 || 70 147 
 2. Preservation & management of natural resources || 55 143 || 59 193 || 56 333 || 59 955 || 59 888 || 60 810 || 61 289 
 3. Citizenship, freedom, security & justice || 1 273 || 1 362 || 1 518 || 1 693 || 1 889 || 2 105 || 2 376 
 4. EU as a global player || 6 578 || 7 002 || 7 440 || 7 893 || 8 430 || 8 997 || 9 595 
 5. Administration || 7 039 || 7 380 || 7 525 || 7 882 || 8 091 || 8 523 || 9 095 
 6. Compensations || 445 || 207 || 210 || 0 || 0 || 0 || 0 
 Commitment appropriations: || 124 457 || 132 797 || 134 722 || 140 978 || 142 272 || 148 049 || 152 502 
   ||   ||   ||   ||   ||   ||   ||   
 Total payment appropriations: || 122 190 || 129 681 || 120 445 || 134 289 || 133 700 || 141 360 || 143 911 
This section describes
the main categories of EU expenditure, classified by heading of the financial
framework 2007-2013. The 2012 financial year was the sixth covered by the
financial framework 2007-2013. The overall ceiling on commitments
appropriations for 2012 comes to EUR 148 049 million, equivalent to 1.13% of
GNI. The corresponding ceiling on the appropriations for payments comes to EUR
141 360 million, i.e. 1.08 % of GNI. The above table shows the financial
framework at current prices.
Heading 1 – Sustainable growth
This heading is divided
into two separate, but interlinked components:
-                
1a. Competitiveness for growth and employment, encompassing
expenditure on research and innovation, education and training, trans-European
networks, social policy, the internal market and accompanying policies.
-                
1b. Cohesion for growth and employment, designed to enhance
convergence of the least developed Member States and regions, to complement the
EU strategy for sustainable development outside the less prosperous regions and
to support inter regional cooperation..
Heading 2 – Preservation and
management of natural resources
Heading 2 includes the
common agricultural and fisheries policies, rural development and environmental
measures, in particular Natura 2000. The amount earmarked for the common
agricultural policy reflects the agreement reached at the European Council in
October 2002.
Heading 3 – Citizenship, freedom,
security and justice
The new heading 3
(Citizenship, freedom, security and justice) reflects the growing importance
attached to certain fields where the EU has been assigned new tasks – justice
and home affairs, border protection, immigration and asylum policy, public
health and consumer protection, culture, youth, information and dialogue with
citizens. It is split in two components:
-                
3a. Freedom, Security and Justice
-                
3b. Citizenship
Heading 4 – The EU as a global
player
Heading 4 covers all
external action, including pre-accession instruments. Whereas the Commission
had proposed to integrate the European Development Fund (EDF) into the
financial framework, the European Council and the European Parliament agreed to
leave it outside.
Heading 5 - Administration
This heading covers
administrative expenditure for all institutions, pensions and the European
Schools. For the Institutions other than the Commission, these costs make up
the total of their expenditure, but the Agencies and other bodies make both
administrative and operational expenditure.
Heading 6 - Compensations
In accordance with the
political agreement that the new Member States should not become
net-contributors to the budget at the very beginning of their membership,
compensation was foreseen under this heading. This amount was available as
transfers to them to balance their budgetary receipts and contributions.
3.2      Policy areas
As part of
its use of Activity Based Management (ABM) the Commission implements Activity
Based Budgeting (ABB) in its planning and management processes. ABB involves a
budget structure where budget titles correspond to policy areas and budget
chapters to activities. ABB aims to provide a clear framework for translating
the Commission's policy objectives into action, either through legislative,
financial or any other public policy means. By structuring the Commission's
work in terms of activities, a clear picture is obtained of the Commission's
undertakings and simultaneously a common framework is established for priority
setting. Resources are allocated to priorities during the budget procedure,
using the activities as the building blocks for budgeting purposes. By
establishing such a link between activities and the resources allocated to
them, ABB aims to increase efficiency and effectiveness in the use of resources
in the Commission.
A policy area may be
defined as a homogeneous grouping of activities constituting parts of the
Commission's work, which are relevant for the decision-making process. Each
policy area corresponds, in general, to a DG, and encompassing an average of
about 6 or 7 individual activities. Policy areas are mainly operational, since
their core activities aim at benefiting a third-party beneficiary within their
respective domains of activity. The operational budget is completed with the
necessary administrative expenditure for each policy area.
4.         INSTITUTIONS
AND AGENCIES
The budgetary implementation
reports can be found after these explanatory notes.
The consolidated
reports on the implementation of the general budget of the EU include, as in
previous years, the budget implementation of all Institutions since within the
EU budget a separate budget for each Institution is established. Agencies do
not have a separate budget inside the EU budget and they are partially financed
by a Commission budget subsidy. 
Concerning the EEAS, it
should be noted that, in addition to its own budget, it also receives
contributions from the Commission of EUR 212 million (2011: EUR 202 million)
and the EDF of EUR 53 million (2011: EUR 50 million). These budget credits are
put at the disposal of the EEAS (as assigned revenue) so as to cover primarily
the costs of Commission staff working in the EU delegations, these delegations
being administratively managed by the EEAS.
In order to provide all
relevant budgetary data for the Agencies, the budgetary part of the
consolidated annual accounts include separate reports on the implementation of
the individual budgets of the traditional agencies consolidated.
AGGREGATED REPORTS ON THE IMPLEMENTATION OF
THE BUDGET*
*
It should be noted that due to the rounding of figures into millions of euros, some financial data in
these budgetary tables may appear not to add-up. 
 2. SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
 Title || Income appropriations || Entitlements established || Revenue || Receipts as || Outstanding 
   || Initial || Final || Current year || Carried over || Total || On entitlements current year || On entitlements carried over || Total || % of budget ||   
 1. Own resources || 127 512 || 128 655 || 128 902 || 29 || 128 931 || 128 883 || 2 || 128 886 || 100.18% || 45 
 3. Surpluses, balances and adjustments || 0 || 1 994 || 1 939 || 102 || 2 041 || 1 939 || 102 || 2 041 || 102.34% || 0 
 4. Revenue accruing from persons working with the institutions & with other EU bodies || 1 312 || 1 312 || 1 235 || 6 || 1 241 || 1 230 || 6 || 1 236 || 94.15% || 5 
 5. Revenue from administrative operations of institutions || 60 || 68 || 619 || 22 || 641 || 594 || 18 || 612 || 896.16% || 29 
 6. Contributions and refunds in connection with community agreements & programmes || 50 || 50 || 3 163 || 291 || 3 453 || 2 776 || 152 || 2 928 || 5856.15% || 525 
 7. Interest on late payments and fines || 123 || 3 648 || 1 821 || 12 761 || 14 582 || 13 || 3 795 || 3 807 || 104.37% || 10 775 
 8. Borrowing and lending operations || 0 || 0 || 63 || 159 || 222 || 0 || 0 || 0 ||   || 222 
 9. Miscellaneous revenue || 30 || 30 || 29 || 10 || 39 || 26 || 5 || 31 || 101.61% || 9 
 Total || 129 088 || 135 758 || 137 771 || 13 379 || 151 150 || 135 460 || 4 080 || 139 541 || 102.79% || 11 610 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Detail Title 1: Own resources 
 Chapter || Income appropriations || Entitlements established || Revenue || Receipts as || Outstanding 
   || Initial || Final || Current year || Carried over || Total || On entitlements current year || On entitlements carried over ||  Total || % of budget ||   
 11. Sugar levies || 123 || 123 || 193 || 0 || 193 || 193 || 0 || 193 || 156.04% || 0 
 12. Customs duties || 19 171 || 16 701 || 16 277 || 29 || 16 306 || 16 258 || 2 || 16 261 || 97.37% || 45 
 13. VAT || 14 499 || 14 546 || 14 648 || 0 || 14 648 || 14 648 || 0 || 14 648 || 100.70% || 0 
 14. GNI || 93 719 || 97 284 || 97 856 || 0 || 97 856 || 97 856 || 0 || 97 856 || 100.59% || 0 
 15. Correction of budgetary imbalances || 0 || 0 || (74) || 0 || (74) || (74) || 0 || (74) ||   || 0 
 16. Reduction GNI-based contributions NL, S || 0 || 0 || 2 || 0 || 2 || 2 || 0 || 2 ||   || 0 
 Total || 127 512 || 128 655 || 128 902 || 29 || 128 931 || 128 883 || 2 || 128 886 || 100.18% || 45 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Detail Title 3: Surpluses, balances and adjustments 
 Chapter || Income appropriations || Entitlements established || Revenue || Receipts as || Outstanding 
   || Initial || Final || Current year || Carried over || Total || On entitlements current year || On entitlements carried over || Total || % of budget ||   
 30. Surplus from previous year || 0 || 1 497 || 1 497 || 0 || 1 497 || 1 497 || 0 || 1 497 || 100.00% || 0 
 31. VAT balances || 0 || 218 || 223 || 23 || 246 || 223 || 23 || 246 || 112.94% || 0 
 32. GNI balances || 0 || 280 || 204 || 80 || 284 || 204 || 80 || 284 || 101.42% || 0 
 34. Adjustment for non-participation in JHAP || 0 || 0 || (3) || 0 || (3) || (3) || 0 || (3) ||   || 0 
 35. UK correction-adjustments || 0 || 0 || 3 || 0 || 3 || 3 || 0 || 3 ||   || 0 
 36. UK correction- intermediate calculation || 0 || 0 || 15 || 0 || 15 || 15 || 0 || 15 ||   || 0 
 Total || 0 || 1 994 || 1 939 || 102 || 2 041 || 1 939 || 102 || 2 041 || 102.34% || 0 
 3.1 Breakdown & changes in commitment & payment appropriations by financial FRAMEWORK HEADING || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
   || Commitment appropriations || Payment appropriations 
 Financial Framework Heading || Appropriations adopted || Modifications (Transfers & AB) || Carried over   || Assigned revenue || Total additional || Total authorised || Appropriations adopted || Modifications (Transfers & AB) || Carried over || Assigned revenue || Total additional || Total authorised 
   || 1 || 2 || 3 || 4 || 5=3+4 || 6=1+2+5 || 7 || 8 || 9 || 10 || 11=9+10 || 12=7+8+11 
 1 Sustainable growth || 67 506 || 636 || 36 || 2 664 || 2 700 || 70 842 || 55 337 || 5 137 || 187 || 3 092 || 3 279 || 63 753 
 2 Preservation and management of natural resources || 59 976 || (126) || 23 || 2 325 || 2 348 || 62 198 || 57 034 || 982 || 78 || 2 315 || 2 393 || 60 409 
 3 Citizenship, freedom, security and justice || 2 065 || 688 || 41 || 199 || 240 || 2 994 || 1 484 || 729 || 47 || 216 || 263 || 2 477 
 4 The EU as global player || 9 406 || (2) || 178 || 349 || 527 || 9 931 || 6 955 || (178) || 52 || 354 || 405 || 7 182 
 5 Administration || 8 280 || 0 || 22 || 811 || 833 || 9 113 || 8 278 || 0 || 711 || 835 || 1 546 || 9 824 
 6 Compensations ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Total || 147 232 || 1 196 || 300 || 6 348 || 6 649 || 155 077 || 129 088 || 6 670 || 1 074 || 6 812 || 7 886 || 143 644 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 3.2 Implementation of commitment appropriations by financial FRAMEWORK HEADING 
   ||   ||   ||   ||   || EUR millions 
 Financial Framework Heading || Commitment appropriations authorised || Commitments made || Appropriations carried over || Appropriations lapsing 
   || From the year’s appropriations   || From carry-overs || From assigned revenue || Total || % || Assigned revenue || Carry-overs by decision || Total || % || From the year’s budget appropriations || From carry overs || Assigned revenue || Total || %   
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9=7+8 || 10=9/1 || 11 || 12 || 13 || 14=11+12+13 || 15=14/1   
 1 Sustainable growth || 70 842 || 67 653 || 36 || 1 311 || 69 000 || 97.40% || 1 354 || 28 || 1 381 || 1.95% || 461 || 0 || 0 || 461 || 0.65% 
 2 Preservation and management of natural resources || 62 198 || 59 825 || 23 || 969 || 60 817 || 97.78% || 1 356 || 2 || 1 357 || 2.18% || 24 || 0 || 0 || 24 || 0.04% 
 3 Citizenship, freedom, security and justice || 2 994 || 2 741 || 41 || 110 || 2 892 || 96.62% || 89 || 0 || 89 || 2.96% || 13 || 0 || 0 || 13 || 0.42% 
 4 The EU as a global player || 9 931 || 9 364 || 178 || 211 || 9 753 || 98.21% || 138 || 2 || 140 || 1.41% || 38 || 0 || 0 || 38 || 0.38% 
 5 Administration || 9 113 || 8 184 || 22 || 617 || 8 822 || 96.81% || 195 || 0 || 195 || 2.14% || 96 || 0 || 0 || 96 || 1.05% 
 6 Compensations ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Total || 155 077 || 147 766 || 300 || 3 218 || 151 284 || 97.55% || 3 131 || 31 || 3 162 || 2.04% || 631 || 0 || 0 || 631 || 0.41% 
 3.3 Implementation of payment appropriations by financial FRAMEWORK HEADING 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
 Financial Framework Heading || Payment Approp-riations authorised || Payments made || Appropriations carried over || Appropriations lapsing 
 From the year’s appropriations || From carry-overs || From assigned revenue || Total || % || Automatic carry-overs || Carry-overs by decision || Assigned revenue || Total || % || From the year’s appropriations || From carryovers || Assigned revenue || Total || % 
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9 || 10=7+8+9 || 11=10/1 || 12 || 13 || 14   || 15=12+ 13+14 || 16= 15/1   
 1 Sustainable growth || 63 753 || 60 288 || 168 || 1 129 || 61 585 || 96.60% || 128 || 26 || 1 963 || 2 117 || 3.32% || 32 || 19 || 0 || 51 || 0.08% 
 2 Preservation & management of natural resources || 60 409 || 57 960 || 72 || 1 064 || 59 096 || 97.83% || 32 || 4 || 1 251 || 1 287 || 2.13% || 20 || 5 || 0 || 26 || 0.04% 
 3 Citizenship, freedom, security & justice || 2 477 || 2 192 || 46 || 136 || 2 375 || 95.86% || 8 || 1 || 80 || 88 || 3.57% || 13 || 1 || 0 || 14 || 0.57% 
 4 The EU as a global player || 7 182 || 6 741 || 31 || 291 || 7 064 || 98.35% || 26 || 4 || 63 || 92 || 1.28% || 6 || 20 || 0 || 26 || 0.37% 
 5 Administration || 9 824 || 7 475 || 628 || 461 || 8 564 || 87.18% || 706 || 1 || 373 || 1 081 || 11.01% || 95 || 83 || 0 || 178 || 1.81% 
 6 Compensations ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Total || 143 644 || 134 656 || 946 || 3 081 || 138 683 || 96.55% || 900 || 36 || 3 730 || 4 666 || 3.25% || 166 || 128 || 0 || 295 || 0.21% 
 3.4 MOVEMENTs IN COMMITMENTS OUTSTANDING - BY FINANCIAL FRAMEWORK HEADING || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
   || Commitments outstanding at the end of the previous year || Commitments of the year ||   
 Financial Framework Heading || Commitments carried forward from previous year || Decommitments /Revaluations/ Cancellations   || Payments   || Commitments outstanding at year-end || Commitments made during the year || Payments   || Cancellation of commitments which cannot be carried over || Commitments outstanding at year-end || Total Commitments outstanding at year-end 
 1 Sustainable growth || 159 707 || (850) || (54 901) || 103 957 || 69 000 || (6 684) || (1) || 62 314 || 166 271 
 2 Preservation and management of natural resources || 25 302 || (137) || (12 983) || 12 182 || 60 817 || (46 113) || 0 || 14 703 || 26 886 
 3 Citizenship, freedom, security and justice || 2 130 || (332) || (547) || 1 251 || 2 892 || (1 827) || 0 || 1 065 || 2 316 
 4 The EU as a global player || 19 567 || (827) || (4 870) || 13 870 || 9 753 || (2 193) || (1) || 7 558 || 21 429 
 5 Administration || 737 || (90) || (628) || 19 || 8 822 || (7 936) || 4 || 890 || 909 
 6 Compensations ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Total || 207 443 || (2 234) || (73 930) || 131 279 || 151 284 || (64 754) || 1 || 86 531 || 217 810 
 3.5 breakdown of commitments outstanding by year of origin - BY FINANCIAL FRAMEWORK HEADING || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions || 
 Financial Framework Heading || <2006 || 2006 || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || Total 
 1 Sustainable growth || 1 222 || 6 765 || 499 || 2 978 || 11 444 || 30 896 || 50 154 || 62 314 || 166 271 
 2 Preservation & management of natural resources || 66 || 739 || 66 || 144 || 286 || 1 893 || 8 987 || 14 703 || 26 886 
 3 Citizenship, freedom, security and justice || 14 || 5 || 28 || 86 || 241 || 314 || 562 || 1 065 || 2 316 
 4 The EU as a global player || 672 || 650 || 710 || 1 291 || 2 199 || 3 464 || 4 884 || 7 558 || 21 429 
 5 Administration || 0 || 0 || 0 || 0 || 0 || 0 || 19 || 890 || 909 
 Total || 1 975 || 8 159 || 1 304 || 4 498 || 14 171 || 36 568 || 64 606 || 86 531 || 217 810 
            3.6 Breakdown and changes in commitment and payment appropriations by Policy Area || 
   || EUR millions 
   || Commitment appropriations || Payment appropriations 
 Policy Area || Approps adopted || Modifications (Transfer /AB) || Carried over || Assigned revenue || Total additional || Total authorised || Approps adopted || Modifications (Transfer/ AB) || Carried over || Assigned revenue || Total additional || Total authorised 
   || 1 || 2 || 3 || 4 || 5=3+4 || 6=1+2+5 || 7 || 8 || 9 || 10 || 11=9+10 || 12=7+8+11 
 01 Economic and financial affairs || 611 || (94) || 0 || 19 || 19 || 536 || 511 || (42) || 7 || 17 || 24 || 493 
 02 Enterprise || 1 148 || (4) || 0 || 132 || 132 || 1 276 || 1 079 || 121 || 21 || 174 || 195 || 1 395 
 03 Competition || 92 || (1) || 0 || 5 || 5 || 96 || 92 || (1) || 7 || 5 || 12 || 103 
 04 Employment and social affairs || 11 581 || 191 || 34 || 12 || 46 || 11 818 || 9 075 || 2 601 || 66 || 12 || 78 || 11 755 
 05 Agriculture and rural development || 58 587 || (22) || 0 || 2 311 || 2 311 || 60 877 || 55 880 || 989 || 70 || 2 303 || 2 373 || 59 242 
 06 Mobility and transport || 1 664 || (1) || 0 || 91 || 91 || 1 754 || 1 079 || (40) || 6 || 110 || 116 || 1 156 
 07 Environment and Climate action || 493 || (1) || 0 || 17 || 17 || 508 || 393 || (20) || 18 || 17 || 35 || 409 
 08 Research || 5 930 || 643 || 0 || 1 045 || 1 045 || 7 618 || 4 218 || 632 || 30 || 1 366 || 1 396 || 6 245 
 09 Information society and media || 1 678 || (2) || 0 || 309 || 309 || 1 985 || 1 357 || 33 || 13 || 373 || 387 || 1 776 
 10 Direct research || 411 || 0 || 0 || 521 || 521 || 932 || 404 || 1 || 44 || 444 || 488 || 893 
 11 Maritime affairs and Fisheries || 1 033 || (48) || 23 || 3 || 26 || 1 011 || 806 || (56) || 4 || 3 || 7 || 757 
 12 Internal market || 101 || (2) || 0 || 7 || 7 || 107 || 98 || 1 || 7 || 7 || 13 || 112 
 13 Regional policy || 42 045 || 569 || 40 || 8 || 48 || 42 662 || 35 538 || 2 686 || 49 || 8 || 57 || 38 282 
 14 Taxation and customs union || 143 || (1) || 0 || 5 || 5 || 147 || 110 || 18 || 7 || 5 || 12 || 140 
 15 Education and culture || 2 697 || (8) || 0 || 602 || 603 || 3 292 || 2 112 || 280 || 16 || 651 || 667 || 3 059 
 16 Communication || 262 || 1 || 0 || 8 || 8 || 271 || 253 || 3 || 14 || 8 || 22 || 278 
 17 Health and consumer protection || 687 || (68) || 0 || 34 || 34 || 653 || 592 || 16 || 12 || 33 || 45 || 652 
 18 Home affairs || 1 264 || (1) || 3 || 56 || 59 || 1 322 || 756 || 29 || 7 || 68 || 75 || 860 
 19 External relations || 4 817 || (51) || 44 || 158 || 202 || 4 969 || 3 276 || (188) || 17 || 166 || 183 || 3 271 
 20 Trade || 104 || (1) || 0 || 3 || 3 || 106 || 102 || 0 || 6 || 3 || 9 || 111 
 21 Development & relations ACP States || 1 498 || (2) || 127 || 110 || 237 || 1 733 || 1 310 || 21 || 33 || 111 || 144 || 1 475 
 22 Enlargement || 1 088 || 3 || 8 || 68 || 75 || 1 166 || 921 || (1) || 4 || 51 || 55 || 976 
 23 Humanitarian aid || 900 || 378 || 0 || 21 || 21 || 1 299 || 842 || 259 || 7 || 34 || 40 || 1 141 
 24 Fight against fraud || 79 || 0 || 0 || 0 || 0 || 79 || 74 || 2 || 7 || 0 || 7 || 83 
 25 Com. pol.coordination and legal advice || 194 || (1) || 0 || 11 || 11 || 204 || 193 || (1) || 16 || 11 || 27 || 219 
 26 Commission’s administration || 1 017 || 62 || 0 || 120 || 120 || 1 200 || 1 001 || 74 || 146 || 122 || 268 || 1 343 
 27 Budget || 69 || (12) || 0 || 7 || 7 || 63 || 69 || (12) || 9 || 7 || 16 || 73 
 28 Audit || 12 || 0 || 0 || 1 || 1 || 12 || 12 || 0 || 1 || 1 || 1 || 13 
 29 Statistics || 134 || (6) || 0 || 16 || 16 || 144 || 122 || (1) || 6 || 22 || 27 || 148 
 30 Pensions and related expenditure || 1 335 || (14) || 0 || 0 || 0 || 1 321 || 1 335 || (14) || 0 || 0 || 0 || 1 321 
 31 Language Services || 399 || (9) || 0 || 87 || 87 || 477 || 399 || (9) || 24 || 87 || 111 || 501 
 32 Energy || 718 || (1) || 0 || 47 || 47 || 764 || 1 339 || (622) || 6 || 60 || 66 || 782 
 33 Justice || 218 || 0 || 0 || 15 || 15 || 233 || 187 || 2 || 3 || 14 || 17 || 206 
 40 Reserves || 759 || (298) || 0 || 0 || 0 || 461 || 90 || (90) || 0 || 0 || 0 || 0 
 90 Other Institutions || 3 464 || 0 || 22 || 498 || 519 || 3 983 || 3 464 || 0 || 393 || 519 || 912 || 4 376 
 Total || 147 232 || 1 196 || 300 || 6 348 || 6 649 || 155 077 || 129 088 || 6 670 || 1 074 || 6 812 || 7 886 || 143 644 
         3.7 Implementation of commitment appropriations by Policy Area         EUR millions || 
 Policy Area || Commitment appropriations authorised   || Commitments made || Appropriations carried over || Appropriations lapsing 
 From the year’s approps || From carry-overs || Assigned revenue || Total   || %   || Assigned revenue || Carry-overs: decision || Total || % || From year’s budget approps || From carry-overs || Assigned revenue || Total || % 
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9=7+8 || 10=9/1 || 11 || 12 || 13 || 14=11+12+13 || 15=14/1 
 01 Economic and financial affairs || 536 || 517 || 0 || 18 || 535 || 99.66% || 2 || 0 || 2 || 0.33% || 0 || 0 || 0 || 0 || 0.01% 
 02 Enterprise || 1 276 || 1 144 || 0 || 92 || 1 236 || 96.84% || 40 || 0 || 40 || 3.13% || 0 || 0 || 0 || 0 || 0.03% 
 03 Competition || 96 || 91 || 0 || 3 || 94 || 97.42% || 2 || 0 || 2 || 2.43% || 0 || 0 || 0 || 0 || 0.15% 
 04 Employment and social affairs || 11 818 || 11 742 || 34 || 7 || 11 782 || 99.70% || 6 || 24 || 30 || 0.25% || 6 || 0 || 0 || 6 || 0.05% 
 05 Agriculture and rural development || 60 877 || 58 550 || 0 || 964 || 59 514 || 97.76% || 1 347 || 2 || 1 349 || 2.22% || 13 || 0 || 0 || 13 || 0.02% 
 06 Mobility and transport || 1 754 || 1 651 || 0 || 61 || 1 713 || 97.65% || 29 || 0 || 29 || 1.67% || 12 || 0 || 0 || 12 || 0.68% 
 07 Environment & Climate action || 508 || 486 || 0 || 10 || 496 || 97.58% || 7 || 0 || 7 || 1.47% || 5 || 0 || 0 || 5 || 0.95% 
 08 Research || 7 618 || 6 573 || 0 || 486 || 7 059 || 92.66% || 559 || 0 || 559 || 7.34% || 0 || 0 || 0 || 0 || 0.00% 
 09 Information society and media || 1 985 || 1 675 || 0 || 203 || 1 878 || 94.60% || 106 || 0 || 107 || 5.37% || 1 || 0 || 0 || 1 || 0.03% 
 10 Direct research || 932 || 411 || 0 || 83 || 494 || 53.04% || 438 || 0 || 438 || 46.95% || 0 || 0 || 0 || 0 || 0.01% 
 11 Maritime affairs and Fisheries || 1 011 || 982 || 23 || 1 || 1 007 || 99.60% || 1 || 0 || 1 || 0.12% || 3 || 0 || 0 || 3 || 0.28% 
 12 Internal market || 107 || 99 || 0 || 2 || 101 || 94.46% || 5 || 0 || 5 || 4.72% || 1 || 0 || 0 || 1 || 0.82% 
 13 Regional policy || 42 662 || 42 601 || 40 || 6 || 42 647 || 99.96% || 2 || 3 || 5 || 0.01% || 10 || 0 || 0 || 10 || 0.02% 
 14 Taxation and customs union || 147 || 142 || 0 || 2 || 144 || 97.76% || 3 || 0 || 3 || 2.20% || 0 || 0 || 0 || 0 || 0.04% 
 15 Education and culture || 3 292 || 2 689 || 0 || 399 || 3 088 || 93.79% || 204 || 0 || 204 || 6.19% || 1 || 0 || 0 || 1 || 0.02% 
 16 Communication || 271 || 262 || 0 || 4 || 265 || 97.92% || 4 || 0 || 4 || 1.60% || 1 || 0 || 0 || 1 || 0.48% 
 17 Health & consumer protection || 653 || 616 || 0 || 24 || 639 || 97.96% || 10 || 0 || 10 || 1.53% || 3 || 0 || 0 || 3 || 0.51% 
 18 Home affairs || 1 322 || 1 253 || 3 || 35 || 1 290 || 97.57% || 21 || 0 || 21 || 1.62% || 11 || 0 || 0 || 11 || 0.80% 
 19 External relations || 4 969 || 4 765 || 44 || 63 || 4 872 || 98.06% || 95 || 0 || 95 || 1.91% || 1 || 0 || 0 || 1 || 0.02% 
 20 Trade || 106 || 103 || 0 || 2 || 104 || 98.26% || 1 || 0 || 2 || 1.58% || 0 || 0 || 0 || 0 || 0.16% 
 21 Development & relations ACP || 1 733 || 1 494 || 127 || 99 || 1 719 || 99.19% || 12 || 2 || 14 || 0.78% || 0 || 0 || 0 || 0 || 0.03% 
 22 Enlargement || 1 166 || 1 090 || 8 || 37 || 1 135 || 97.38% || 30 || 0 || 30 || 2.61% || 0 || 0 || 0 || 0 || 0.01% 
 23 Humanitarian aid || 1 299 || 1 277 || 0 || 17 || 1 294 || 99.61% || 4 || 0 || 4 || 0.34% || 1 || 0 || 0 || 1 || 0.05% 
 24 Fight against fraud || 79 || 79 || 0 || 0 || 79 || 99.81% || 0 || 0 || 0 || 0.03% || 0 || 0 || 0 || 0 || 0.16% 
 25 Policy coord and legal advice || 204 || 191 || 0 || 5 || 196 || 96.51% || 5 || 0 || 5 || 2.51% || 2 || 0 || 0 || 2 || 0.98% 
 26 Commission’s administration || 1 200 || 1 078 || 0 || 71 || 1 149 || 95.78% || 50 || 0 || 50 || 4.15% || 1 || 0 || 0 || 1 || 0.08% 
 27 Budget || 63 || 56 || 0 || 4 || 61 || 95.47% || 3 || 0 || 3 || 4.42% || 0 || 0 || 0 || 0 || 0.11% 
 28 Audit || 12 || 11 || 0 || 0 || 12 || 96.23% || 0 || 0 || 0 || 3.04% || 0 || 0 || 0 || 0 || 0.73% 
 29 Statistics || 144 || 124 || 0 || 11 || 135 || 93.94% || 5 || 0 || 5 || 3.38% || 4 || 0 || 0 || 4 || 2.68% 
 30 Pensions +related expenditure || 1 321 || 1 318 || 0 || 0 || 1 318 || 99.79% || 0 || 0 || 0 || 0.00% || 3 || 0 || 0 || 3 || 0.21% 
 31 Language Services || 477 || 390 || 0 || 45 || 435 || 91.20% || 42 || 0 || 42 || 8.78% || 0 || 0 || 0 || 0 || 0.03% 
 32 Energy || 764 || 716 || 0 || 16 || 731 || 95.67% || 32 || 0 || 32 || 4.15% || 1 || 0 || 0 || 1 || 0.17% 
 33 Justice || 233 || 216 || 0 || 6 || 222 || 95.30% || 10 || 0 || 10 || 4.12% || 1 || 0 || 0 || 1 || 0.58% 
 40 Reserves || 461 || 0 || 0 || 0 || 0 || 0.00% || 0 || 0 || 0 || 0.00% || 461 || 0 || 0 || 461 || 100.00% 
 90 Other Institutions || 3 983 || 3 376 || 22 || 444 || 3 841 || 96.43% || 54 || 0 || 54 || 1.36% || 88 || 0 || 0 || 88 || 2.21% 
 Total || 155 077 || 147 766 || 300 || 3 218 || 151 284 || 97.55% || 3 131 || 31 || 3 162 || 2.04% || 631 || 0 || 0 || 631 || 0.41% 
 3.8 Implementation of payment appropriations by Policy Area || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
 Policy Area || Payment Appro-priations authorised || Payments made || Appropriations carried over || Appropriations lapsing 
   || From the year's approps || From carry-overs || Assigned revenue || Total || % || Automatic carry-overs || Carry-overs by decision || Assigned revenue || Total || % || From the year's approps || From carry-overs || Assigned revenue || Total || % 
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9 || 10=7+8+9 || 11=10/1 || 12 || 13 || 14 || 15=12+13+14 || 16=15/1 
 01 Economic and financial affairs || 493 || 463 || 6 || 15 || 484 || 98.13% || 6 || 0 || 2 || 8 || 1.64% || 0 || 1 || 0 || 1 || 0.23% 
 02 Enterprise || 1 395 || 1 180 || 19 || 72 || 1 271 || 91.12% || 19 || 0 || 103 || 121 || 8.70% || 1 || 2 || 0 || 3 || 0.18% 
 03 Competition || 103 || 83 || 6 || 2 || 92 || 89.72% || 7 || 0 || 3 || 10 || 9.78% || 0 || 0 || 0 || 1 || 0.50% 
 04 Employment and social affairs || 11 755 || 11 629 || 63 || 7 || 11 699 || 99.53% || 13 || 24 || 5 || 43 || 0.36% || 9 || 4 || 0 || 13 || 0.11% 
 05 Agriculture & rural development || 59 242 || 56 829 || 66 || 1 053 || 57 948 || 97.82% || 23 || 4 || 1 250 || 1 276 || 2.15% || 13 || 4 || 0 || 18 || 0.03% 
 06 Mobility and transport || 1 156 || 1 031 || 5 || 69 || 1 105 || 95.57% || 6 || 0 || 41 || 47 || 4.03% || 3 || 1 || 0 || 5 || 0.40% 
 07 Environment & Climate action || 409 || 355 || 17 || 10 || 382 || 93.39% || 17 || 1 || 6 || 24 || 5.89% || 1 || 2 || 0 || 3 || 0.72% 
 08 Research || 6 245 || 4 827 || 25 || 455 || 5 307 || 84.97% || 23 || 0 || 911 || 934 || 14.95% || 0 || 5 || 0 || 5 || 0.08% 
 09 Information society and media || 1 776 || 1 375 || 12 || 114 || 1 501 || 84.54% || 14 || 0 || 259 || 273 || 15.36% || 1 || 1 || 0 || 2 || 0.10% 
 10 Direct research || 893 || 357 || 40 || 69 || 466 || 52.13% || 48 || 0 || 375 || 423 || 47.35% || 0 || 5 || 0 || 5 || 0.52% 
 11 Maritime affairs and Fisheries || 757 || 742 || 2 || 1 || 745 || 98.45% || 3 || 0 || 1 || 5 || 0.64% || 5 || 2 || 0 || 7 || 0.91% 
 12 Internal market || 112 || 92 || 6 || 2 || 99 || 88.71% || 5 || 0 || 5 || 11 || 9.47% || 1 || 1 || 0 || 2 || 1.82% 
 13 Regional policy || 38 282 || 38 200 || 48 || 6 || 38 254 || 99.93% || 12 || 0 || 2 || 14 || 0.04% || 12 || 1 || 0 || 14 || 0.04% 
 14 Taxation and customs union || 140 || 121 || 7 || 2 || 130 || 92.66% || 7 || 0 || 3 || 10 || 7.04% || 0 || 0 || 0 || 0 || 0.30% 
 15 Education and culture || 3 059 || 2 379 || 14 || 368 || 2 761 || 90.23% || 13 || 0 || 284 || 296 || 9.69% || 1 || 2 || 0 || 2 || 0.08% 
 16 Communication || 278 || 240 || 13 || 3 || 256 || 92.16% || 14 || 0 || 5 || 19 || 6.84% || 1 || 1 || 0 || 3 || 1.00% 
 17 Health and consumer protection || 652 || 596 || 11 || 28 || 635 || 97.34% || 11 || 0 || 5 || 16 || 2.48% || 0 || 1 || 0 || 1 || 0.18% 
 18 Home affairs || 860 || 769 || 6 || 61 || 835 || 97.15% || 4 || 1 || 7 || 12 || 1.44% || 11 || 2 || 0 || 12 || 1.41% 
 19 External relations || 3 271 || 3 073 || 10 || 150 || 3 233 || 98.83% || 13 || 0 || 16 || 30 || 0.90% || 2 || 7 || 0 || 9 || 0.27% 
 20 Trade || 111 || 98 || 6 || 1 || 105 || 94.79% || 4 || 0 || 2 || 5 || 4.86% || 0 || 0 || 0 || 0 || 0.34% 
 21 Development and relations ACP || 1 475 || 1 319 || 19 || 90 || 1 429 || 96.87% || 10 || 0 || 21 || 31 || 2.11% || 1 || 14 || 0 || 15 || 1.03% 
 22 Enlargement || 976 || 914 || 3 || 27 || 943 || 96.68% || 3 || 3 || 25 || 31 || 3.21% || 0 || 1 || 0 || 1 || 0.12% 
 23 Humanitarian aid || 1 141 || 1 093 || 6 || 29 || 1 128 || 98.84% || 7 || 0 || 5 || 12 || 1.01% || 1 || 0 || 0 || 2 || 0.15% 
 24 Fight against fraud || 83 || 66 || 5 || 0 || 71 || 85.23% || 8 || 2 || 0 || 10 || 11.95% || 0 || 2 || 0 || 2 || 2.82% 
 25 Com. Pol. coord.& legal advice || 219 || 176 || 14 || 5 || 195 || 88.73% || 15 || 1 || 6 || 21 || 9.62% || 1 || 2 || 0 || 4 || 1.64% 
 26 Commission’s administration || 1 343 || 963 || 136 || 51 || 1 149 || 85.59% || 111 || 0 || 72 || 183 || 13.60% || 1 || 10 || 0 || 11 || 0.81% 
 27 Budget || 73 || 49 || 9 || 3 || 61 || 83.74% || 7 || 0 || 4 || 11 || 15.45% || 0 || 1 || 0 || 1 || 0.80% 
 28 Audit || 13 || 11 || 1 || 0 || 12 || 91.60% || 0 || 0 || 0 || 1 || 7.06% || 0 || 0 || 0 || 0 || 1.34% 
 29 Statistics || 148 || 115 || 5 || 8 || 128 || 86.27% || 5 || 0 || 13 || 19 || 12.64% || 1 || 1 || 0 || 2 || 1.08% 
 30 Pensions and related expenses || 1 321 || 1 318 || 0 || 0 || 1 318 || 99.79% || 0 || 0 || 0 || 0 || 0.00% || 3 || 0 || 0 || 3 || 0.21% 
 31 Language Services || 501 || 370 || 22 || 41 || 433 || 86.56% || 20 || 0 || 46 || 66 || 13.17% || 0 || 1 || 0 || 1 || 0.27% 
 32 Energy || 782 || 706 || 5 || 12 || 723 || 92.51% || 6 || 0 || 48 || 53 || 6.82% || 4 || 1 || 0 || 5 || 0.66% 
 33 Justice || 206 || 183 || 1 || 6 || 190 || 92.16% || 4 || 1 || 8 || 13 || 6.13% || 2 || 2 || 0 || 4 || 1.71% 
 40 Reserves || 0 || 0 || 0 || 0 || 0 || 0.00% || 0 || 0 || 0 || 0 || 0.00% || 0 || 0 || 0 || 0 || 0.00% 
 90 Other Institutions || 4 376 || 2 934 || 340 || 322 || 3 596 || 82.19% || 442 || 0 || 197 || 638 || 14.59% || 88 || 53 || 0 || 141 || 3.22% 
 Total || 143 644 || 134 656 || 946 || 3 081 || 138 683 || 96.55% || 900 || 36 || 3 730 || 4 666 || 3.25% || 166 || 128 || 0 || 295 || 0.21% 
                                3.9 MOVEMENTs IN COMMITMENTS OUTSTANDING BY POLICY AREA || 
 EUR millions || 
   || Commitments outstanding at end of the previous year || Commitments of the year ||   
 Policy Area || Commitments carried forward from previous year || Decommitments /Revaluations/Cancellations || Payments   || Commitments outstanding at year-end || Commitments made during the year || Payments   || Cancellation  commitments which cannot be carried over || Commitments outstanding at year-end || Total commitments outstanding at year-end 
 01 Economic & financial affairs || 582 || (9) || (143) || 429 || 535 || (341) || 0 || 194 || 623 
 02 Enterprise || 2 155 || (31) || (850) || 1 274 || 1 236 || (421) || 0 || 814 || 2 088 
 03 Competition || 7 || 0 || (6) || 0 || 94 || (86) || 0 || 8 || 8 
 04 Employment & social affairs || 29 625 || (40) || (11 226) || 18 359 || 11 782 || (473) || 0 || 11 309 || 29 668 
 05 Agriculture & rural development || 22 357 || (76) || (11 972) || 10 308 || 59 514 || (45 975) || 0 || 13 539 || 23 847 
 06 Mobility and transport || 2 809 || (100) || (879) || 1 830 || 1 713 || (226) || 0 || 1 487 || 3 317 
 07 Environment & Climate action || 898 || (11) || (243) || 645 || 496 || (138) || 0 || 358 || 1 003 
 08 Research || 9 200 || (170) || (2 983) || 6 047 || 7 059 || (2 324) || 0 || 4 734 || 10 781 
 09 Information society & media || 2 269 || (51) || (782) || 1 436 || 1 878 || (720) || 0 || 1 158 || 2 594 
 10 Direct research || 184 || (13) || (114) || 57 || 494 || (352) || 0 || 142 || 199 
 11 Maritime affairs and Fisheries || 2 062 || (33) || (538) || 1 490 || 1 007 || (207) || 0 || 800 || 2 290 
 12 Internal market || 22 || (2) || (16) || 4 || 101 || (83) || 0 || 18 || 21 
 13 Regional policy || 108 413 || (498) || (36 781) || 71 133 || 42 647 || (1 473) || (1) || 41 174 || 112 307 
 14 Taxation and customs union || 92 || (13) || (55) || 24 || 144 || (75) || 0 || 69 || 93 
 15 Education and culture || 1 921 || (53) || (839) || 1 028 || 3 088 || (1 921) || 0 || 1 167 || 2 195 
 16 Communication || 122 || (13) || (86) || 24 || 265 || (170) || 0 || 95 || 119 
 17 Health and consumer protection || 719 || (81) || (317) || 321 || 639 || (318) || 0 || 321 || 642 
 18 Home affairs || 1 458 || (235) || (268) || 954 || 1 290 || (567) || 0 || 723 || 1 677 
 19 External relations || 10 232 || (528) || (2 379) || 7 324 || 4 872 || (854) || 0 || 4 018 || 11 343 
 20 Trade || 20 || (1) || (13) || 6 || 104 || (93) || 0 || 12 || 18 
 21 Development/relations ACP || 3 281 || (119) || (970) || 2 192 || 1 719 || (459) || 0 || 1 260 || 3 453 
 22 Enlargement || 2 864 || (16) || (769) || 2 079 || 1 135 || (175) || (1) || 960 || 3 039 
 23 Humanitarian aid || 670 || (4) || (417) || 248 || 1 294 || (711) || 0 || 583 || 831 
 24 Fight against fraud || 34 || (7) || (15) || 12 || 79 || (56) || 0 || 23 || 35 
 25 Policy coord. & legal advice || 19 || (3) || (15) || 0 || 196 || (179) || 0 || 17 || 17 
 26 Commission’s administration || 184 || (12) || (161) || 11 || 1 149 || (988) || 0 || 160 || 171 
 27 Budget || 9 || (1) || (9) || 0 || 61 || (52) || 0 || 8 || 8 
 28 Audit || 1 || 0 || (1) || 0 || 12 || (11) || 0 || 1 || 1 
 29 Statistics || 115 || (9) || (45) || 61 || 135 || (82) || 0 || 53 || 114 
 30 Pensions & related expenditure || 0 || 0 || 0 || 0 || 1 318 || (1 318) || 0 || 0 || 0 
 31 Language Services || 24 || (1) || (22) || 0 || 435 || (411) || 0 || 24 || 24 
 32 Energy || 4 522 || (12) || (622) || 3 888 || 731 || (102) || 0 || 629 || 4 518 
 33 Justice || 181 || (34) || (67) || 80 || 222 || (122) || 0 || 99 || 179 
 90 Other Institutions || 397 || (57) || (325) || 15 || 3 841 || (3 272) || 4 || 573 || 588 
 Total || 207 443 || (2 234) || (73 930) || 131 279 || 151 284 || (64 754) || 1 || 86 531 || 217 810 
 3.10 breakdown of commitments outstanding by year of origin BY POLICY AREA || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions || 
 Policy Area || <2006 || 2006 || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || Total 
 01 Economic and financial affairs || 11 || 35 || 10 || 0 || 20 || 167 || 185 || 194 || 623 
 02 Enterprise || 10 || 5 || 17 || 97 || 101 || 546 || 498 || 814 || 2 088 
 03 Competition || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 8 || 8 
 04 Employment and social affairs || 384 || 1 507 || 57 || 267 || 1 241 || 5 457 || 9 446 || 11 309 || 29 668 
 05 Agriculture and rural development || 7 || 456 || 0 || 2 || 152 || 1 437 || 8 254 || 13 539 || 23 847 
 06 Mobility and transport || 15 || 27 || 124 || 103 || 271 || 494 || 797 || 1 487 || 3 317 
 07 Environment & Climate action || 9 || 12 || 57 || 88 || 138 || 151 || 189 || 358 || 1 003 
 08 Research || 114 || 73 || 177 || 381 || 814 || 1 728 || 2 760 || 4 734 || 10 781 
 09 Information society and media || 12 || 8 || 31 || 83 || 207 || 372 || 724 || 1 158 || 2 594 
 10 Direct research || 0 || 3 || 1 || 10 || 10 || 11 || 21 || 142 || 199 
 11 Maritime affairs and Fisheries || 51 || 271 || 5 || 18 || 71 || 411 || 663 || 800 || 2 290 
 12 Internal market || 0 || 0 || 0 || 0 || 0 || 1 || 3 || 18 || 21 
 13 Regional policy || 836 || 5 328 || 21 || 1 875 || 7 437 || 20 613 || 35 024 || 41 174 || 112 307 
 14 Taxation and customs union || 0 || 0 || 0 || 0 || 0 || 4 || 20 || 69 || 93 
 15 Education and culture || 2 || 0 || 47 || 77 || 150 || 255 || 497 || 1 167 || 2 195 
 16 Communication || 0 || 0 || 0 || 0 || 1 || 6 || 17 || 95 || 119 
 17 Health and consumer protection || 9 || 3 || 7 || 43 || 42 || 83 || 133 || 321 || 642 
 18 Home affairs || 4 || 0 || 17 || 64 || 208 || 249 || 412 || 723 || 1 677 
 19 External relations || 266 || 235 || 498 || 846 || 1 236 || 1 725 || 2 518 || 4 018 || 11 343 
 20 Trade || 0 || 0 || 0 || 0 || 0 || 2 || 4 || 12 || 18 
 21 Development and relations ACP States || 113 || 63 || 71 || 193 || 365 || 578 || 810 || 1 260 || 3 453 
 22 Enlargement || 69 || 86 || 129 || 236 || 310 || 513 || 735 || 960 || 3 039 
 23 Humanitarian aid || 0 || 1 || 1 || 9 || 16 || 58 || 163 || 583 || 831 
 24 Fight against fraud || 0 || 0 || 1 || 1 || 2 || 2 || 6 || 23 || 35 
 25 Commission's policy coordination & legal advice || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 17 || 17 
 26 Commission’s administration || 0 || 0 || 0 || 0 || 0 || 0 || 11 || 160 || 171 
 27 Budget || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 8 || 8 
 28 Audit || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 1 || 1 
 29 Statistics || 2 || 2 || 1 || 1 || 3 || 17 || 36 || 53 || 114 
 30 Pensions and related expenditure || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 
 31 Language Services || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 24 || 24 
 32 Energy || 60 || 43 || 28 || 101 || 1 365 || 1 671 || 621 || 629 || 4 518 
 33 Justice || 0 || 0 || 1 || 4 || 12 || 18 || 45 || 99 || 179 
 90 Other Institutions || 0 || 0 || 0 || 0 || 0 || 0 || 15 || 573 || 588 
 Total || 1 975 || 8 159 || 1 304 || 4 498 || 14 171 || 36 568 || 64 606 || 86 531 || 217 810 
 4.1 SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
 Institution || Income appropriations || Entitlements established || Revenue || Receipts as || Outstanding 
   || Initial || Final || Current year || Carried || Total || On entitlements of current year || On entitlements Carried || Total || % of budget ||   
 European Parliament || 147 || 147 || 174 || 26 || 200 || 172 || 4 || 176 || 119.41% || 25 
 European Council and Council || 58 || 58 || 99 || 11 || 109 || 88 || 10 || 98 || 168.80% || 11 
 Commission || 128 761 || 135 431 || 137 081 || 13 342 || 150 423 || 134 783 || 4 066 || 138 849 || 102.52% || 11 573 
 Court of Justice || 44 || 44 || 51 || 0 || 51 || 51 || 0 || 51 || 115.64% || 0 
 Court of Auditors || 21 || 21 || 19 || 0 || 19 || 19 || 0 || 19 || 90.58% || 0 
 Economic and Social Committee || 12 || 12 || 16 || 0 || 16 || 16 || 0 || 16 || 133.47% || 0 
 Committee of the Regions || 8 || 8 || 20 || 0 || 20 || 20 || 0 || 20 || 250.50% || 0 
 Ombudsman || 1 || 1 || 1 || 0 || 1 || 1 || 0 || 1 || 97.10% || 0 
 European Data Protection Supervisor || 1 || 1 || 1 || 0 || 1 || 1 || 0 || 1 || 77.36% || 0 
 European External Action Service || 35 || 35 || 309 || 0 || 310 || 309 || 0 || 309 || 889.83% || 0 
 Total || 129 088 || 135 758 || 137 771 || 13 379 || 151 150 || 135 460 || 4 080 || 139 541 || 102.79% || 11 610 
 4.2 Implementation of commitment and payment appropriations by Institution || 
 Commitment appropriations || 
   ||   ||   ||   ||   ||   ||   ||   || EUR millions 
   Institution || Commitment appropriations authorised || Commitments made || Appropriations carried over || Appropriations lapsing 
 From the year's approps || From carry-overs || From assigned revenue || Total || % || From assigned revenue || Carry-overs by decision || Total || % || From the year's budget approps || from carry-overs || Assigned revenue || Total || % 
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9=7+8 || 10=9/1 || 11 || 12 || 13 || 14=11+12+13 || 15=14/1 
 European Parliament || 1 862 || 1 693 || 22 || 116 || 1 831 || 98.32% || 6 || 0 || 6 || 0.34% || 25 || 0 || 0 || 25 || 1.33% 
 European Council and Council || 612 || 490 || 0 || 42 || 532 || 86.89% || 36 || 0 || 36 || 5.92% || 44 || 0 || 0 || 44 || 7.19% 
 Commission || 151 094 || 144 390 || 279 || 2 774 || 147 443 || 97.58% || 3 077 || 31 || 3 108 || 2.06% || 543 || 0 || 0 || 543 || 0.36% 
 Court of Justice || 351 || 344 || 0 || 1 || 345 || 98.36% || 1 || 0 || 1 || 0.28% || 5 || 0 || 0 || 5 || 1.36% 
 Court of Auditors || 143 || 137 || 0 || 0 || 138 || 96.12% || 0 || 0 || 0 || 0.30% || 5 || 0 || 0 || 5 || 3.59% 
 Economic & Social Committee || 133 || 125 || 0 || 4 || 128 || 96.62% || 0 || 0 || 0 || 0.25% || 4 || 0 || 0 || 4 || 3.13% 
 Committee of the Regions || 99 || 85 || 0 || 12 || 97 || 98.43% || 0 || 0 || 0 || 0.03% || 2 || 0 || 0 || 2 || 1.54% 
 Ombudsman || 10 || 9 || 0 || 0 || 9 || 95.86% || 0 || 0 || 0 || 0.02% || 0 || 0 || 0 || 0 || 4.12% 
 European Data Protection Supervisor || 8 || 7 || 0 || 0 || 7 || 95.21% || 0 || 0 || 0 || 0.00% || 0 || 0 || 0 || 0 || 4.79% 
 European External Action Service || 767 || 486 || 0 || 268 || 754 || 98.37% || 10 || 0 || 10 || 1.26% || 3 || 0 || 0 || 3 || 0.37% 
 Total || 155 077 || 147 766 || 300 || 3 218 || 151 284 || 97.55% || 3 131 || 31 || 3 162 || 2.04% || 631 || 0 || 0 || 631 || 0.41% 
   ||   ||   ||   ||   ||   ||   ||   
 Payment appropriations ||   
   ||   ||   ||   ||   ||   ||   || EUR millions 
   Institution || Payment appropriations authorised || Payments made || Appropriations carried over || Appropriations lapsing 
 From year's approps || From carryovers || From assigned revenue || Total || % || Automatic carry-overs || Carry-overs by decision || From assigned revenue || Total || % || From year's approps || From carry-overs || Assigned revenue || Total || % 
   || 1 || 2 || 3 || 4 || 5=2+3+4 || 6=5/1 || 7 || 8 || 9 || 10=7+8+9 || 11=10/1 || 12 || 13 || 14 || 15=12+13+14 || 16=15/1 
 European Parliament || 2 092 || 1 388 || 214 || 22 || 1 623 || 77.58% || 305 || 0 || 108 || 413 || 19.76% || 25 || 31 || 0 || 56 || 2.67% 
 European Council and Council || 661 || 444 || 36 || 44 || 524 || 79.31% || 46 || 0 || 41 || 87 || 13.13% || 44 || 6 || 0 || 50 || 7.56% 
 Commission || 139 268 || 131 722 || 605 || 2 759 || 135 087 || 97.00% || 458 || 36 || 3 533 || 4 028 || 2.89% || 78 || 76 || 0 || 154 || 0.11% 
 Court of Justice || 369 || 326 || 16 || 1 || 343 || 92.92% || 18 || 0 || 1 || 19 || 5.15% || 5 || 2 || 0 || 7 || 1.93% 
 Court of Auditors || 156 || 125 || 11 || 0 || 136 || 87.11% || 13 || 0 || 0 || 13 || 8.41% || 5 || 2 || 0 || 7 || 4.48% 
 Economic & Social Committee || 141 || 117 || 7 || 4 || 127 || 90.15% || 8 || 0 || 1 || 9 || 6.19% || 4 || 1 || 0 || 5 || 3.66% 
 Committee of the Regions || 108 || 77 || 7 || 12 || 96 || 89.53% || 8 || 0 || 0 || 8 || 7.37% || 2 || 2 || 0 || 3 || 3.10% 
 Ombudsman || 10 || 8 || 1 || 0 || 9 || 89.11% || 1 || 0 || 0 || 1 || 6.74% || 0 || 0 || 0 || 0 || 4.15% 
 European Data protection Supervisor || 9 || 6 || 1 || 0 || 7 || 81.28% || 1 || 0 || 0 || 1 || 10.68% || 0 || 0 || 0 || 1 || 8.05% 
 European External Action Service || 831 || 444 || 49 || 238 || 731 || 88.06% || 42 || 0 || 46 || 88 || 10.58% || 3 || 8 || 0 || 11 || 1.36% 
 Total || 143 644 || 134 656 || 946 || 3 081 || 138 683 || 96.55% || 900 || 36 || 3 730 || 4 666 || 3.25% || 166 || 128 || 0 || 295 || 0.21% 
 || 4.3 AgencIES income: budget forecasts, entitlements and amounts received || EUR millions || 
 Agency || Forecasted income budget || Entitlements established || Amounts received || Outstanding || Funding Commission Policy Area 
 European Agency for the Cooperation of Energy Regulators || 7 || 7 || 7 || 0 || 06 
 European Asylum Support Office || 7 || 2 || 2 || 0 || 18 
 European Aviation Safety Agency || 150 || 116 || 115 || 1 || 06 
 Frontex || 90 || 76 || 76 || 0 || 18 
 European Centre for the Development of Vocational Training || 19 || 20 || 20 || 1 || 15 
 European Police College || 8 || 9 || 9 || 0 || 18 
 European Chemicals Agency || 33 || 35 || 35 || 0 || 02 
 European Centre for Disease prevention and control || 58 || 58 || 58 || 0 || 17 
 European Monitoring Centre for Drugs and Drug Addiction || 16 || 16 || 16 || 0 || 18 
 European Banking Authority || 21 || 19 || 19 || 0 || 12 
 European Insurance and Occupational Pensions Authority || 16 || 14 || 14 || 0 || 12 
 European Environment Agency || 42 || 52 || 51 || 1 || 07 
 European Police office || 84 || 83 || 83 || 0 || 18 
 European Securities and Markets Authority || 20 || 19 || 19 || 0 || 12 
 Community Fisheries Control Agency || 10 || 10 || 10 || 0 || 11 
 European Food Safety Authority || 77 || 77 || 77 || 0 || 17 
 European Institute for Gender Equality || 8 || 8 || 8 || 0 || 04 
 European GNSS supervisory authority || 13 || 21 || 21 || 0 || 06 
 Fusion for Energy || 344 || 379 || 379 || 0 || 08 
 Eurojust || 33 || 33 || 33 || 0 || 18 
 European Maritime Safety Agency || 59 || 54 || 53 || 0 || 06 
 Office For Harmonisation in the Internal Market || 175 || 176 || 176 || 0 || 12 
 European Medicines Agency || 222 || 254 || 224 || 31 || 02 
 European Network and Information Security Agency || 8 || 8 || 8 || 0 || 09 
 European Regulators for Electronic Communications office || 3 || 3 || 3 || 0 || 09 
 European Union Agency for Fundamental Rights || 21 || 21 || 21 || 0 || 18 
 European Railway Agency || 26 || 26 || 26 || 0 || 06 
 European Agency for Safety and Health at Work || 15 || 15 || 15 || 0 || 04 
 European Institute of Innovation and Technology || 78 || 77 || 77 || 0 || 15 
 Translation Centre for the Bodies of the EU || 48 || 49 || 45 || 4 || 15 
 European Training Foundation || 21 || 20 || 20 || 0 || 15 
 Community Plant Variety Office || 13 || 13 || 13 || 0 || 17 
 European Foundation for the Improvement of Living and Working Conditions || 21 || 21 || 21 || 0 || 04 
 Education, Audiovisual & Culture Executive Agency || 50 || 50 || 50 || 0 || 15 
 Executive Agency for Competitiveness and Innovation || 16 || 17 || 17 || 0 || 06 
 European Research Council Executive Agency || 39 || 39 || 39 || 0 || 08 
 Research Executive Agency || 46 || 47 || 47 || 0 || 08 
 Executive Agency for Health and Consumers || 7 || 7 || 7 || 0 || 17 
 Trans-European Transport Network Executive Agency || 10 || 10 || 10 || 0 || 06 
 Total || 1 936 || 1 963 || 1 925 || 38 ||   
   ||   ||   || EUR millions 
 Type of revenue || Forecasted income budget || Entitlements established || Amounts received || Outstanding 
 Commission Subsidy || 1 304 || 1 276 || 1 272 || 5 
 Fee income || 465 || 490 || 460 || 30 
 Other income || 168 || 197 || 193 || 4 
 Total || 1 936 || 1 963 || 1 925 || 38 
 || 4.4 Commitment & payment appropriations by Agency || 
 ||   || EUR millions || 
 Agency || Commitment appropriations || Payment appropriations 
 Approp-riations || Commit-ments made || Carried over || Approp-riations || Payments made || Carried over 
 European Agency for the Cooperation of Energy Regulators || 7 || 7 || 0 || 8 || 5 || 2 
 European Asylum Support Office || 7 || 5 || 0 || 6 || 2 || 2 
 European Aviation Safety Agency || 164 || 132 || 27 || 176 || 117 || 53 
 Frontex || 90 || 89 || 1 || 128 || 99 || 22 
 European Centre for the Development of Vocational Training || 22 || 21 || 1 || 22 || 19 || 3 
 European Police College || 9 || 8 || 0 || 11 || 8 || 2 
 European Chemicals Agency || 99 || 96 || 0 || 113 || 94 || 15 
 European Centre for Disease prevention and control || 58 || 55 || 0 || 69 || 55 || 10 
 European Monitoring Centre for Drugs and Drug Addiction || 17 || 16 || 0 || 17 || 16 || 0 
 European Banking Authority || 21 || 18 || 0 || 22 || 13 || 7 
 European Insurance and Occupational Pensions Authority || 16 || 14 || 0 || 16 || 11 || 4 
 European Environment Agency || 69 || 52 || 16 || 73 || 45 || 27 
 European Police Office || 85 || 84 || 1 || 100 || 79 || 17 
 European Securities & Markets Authority || 20 || 17 || 0 || 22 || 15 || 4 
 Community Fisheries Control Agency || 9 || 9 || 0 || 11 || 10 || 1 
 European Food Safety Authority || 79 || 78 || 0 || 90 || 80 || 9 
 European Institute for Gender Equality || 8 || 7 || 0 || 11 || 8 || 2 
 European GNSS supervisory authority || 106 || 58 || 47 || 55 || 33 || 22 
 Fusion for Energy || 1 482 || 1 482 || 0 || 384 || 362 || 7 
 Eurojust || 35 || 34 || 1 || 41 || 35 || 5 
 European Maritime Safety Agency || 57 || 53 || 1 || 61 || 53 || 2 
 Office For Harmonisation in the Internal Market || 429 || 189 || 0 || 461 || 180 || 37 
 European Medicines Agency || 226 || 222 || 0 || 262 || 215 || 41 
 European Network and Information Security Agency || 8 || 8 || 0 || 9 || 9 || 1 
 European Regulators for Electronic Communications Office || 3 || 3 || 0 || 3 || 2 || 1 
 European Union Agency for Fundamental Rights || 21 || 21 || 0 || 28 || 23 || 5 
 European Railway Agency || 26 || 25 || 0 || 30 || 26 || 2 
 European Agency for Safety & Health at Work || 17 || 15 || 1 || 20 || 15 || 5 
 European Institute of Innovation and Technology || 97 || 95 || 0 || 83 || 71 || 7 
 Translation Centre for the Bodies of the EU || 48 || 42 || 0 || 52 || 41 || 4 
 European Training Foundation || 20 || 20 || 0 || 21 || 20 || 1 
 Community Plant Variety Office || 14 || 13 || 0 || 14 || 12 || 0 
 European Foundation for the Improvement of Living and Working Conditions || 22 || 21 || 0 || 26 || 20 || 5 
 Education, Audiovisual & Culture Executive Agency || 50 || 49 || 0 || 55 || 48 || 6 
 Executive Agency for Competitiveness and Innovation || 17 || 16 || 0 || 18 || 16 || 1 
 European Research Council Executive Agency || 39 || 38 || 0 || 41 || 38 || 2 
 Research Executive Agency || 46 || 44 || 0 || 50 || 43 || 4 
 Executive Agency for Health and Consumers || 7 || 7 || 0 || 8 || 7 || 1 
 Trans-European Transport Network Executive Agency || 10 || 10 || 0 || 11 || 9 || 1 
 Total || 3 559 || 3 175 || 97 || 2 627 || 1 952 || 338 
 Type of expenditure || Commitment appropriations || Payment appropriations || 
 Appropri-ations || Commit-ments made || Carried over || Appropri-ations || Payments made || Carried over 
 Staff || 813 || 781 || 2 || 829 || 777 || 18 
 Administrative expenses || 305 || 292 || 1 || 377 || 277 || 79 
 Operational expenses || 2 442 || 2 102 || 95 || 1 421 || 899 || 242 
 Total || 3 559 || 3 175 || 97 || 2 627 || 1 952 || 338 
 4.5 BUDGET RESULT INCLUDING AGENCIES || EUR millions || 
 ||   || EUROPEAN UNION ||   AGENCIES || Elimination of subsidies to agencies || TOTAL 
 || Revenue for the financial year || 139 541 || 1 925 || (1 272) || 140 194 
 || Payments against current year appropriations || (137 738) || (1 739) || 1 272 || (138 205) 
 || Payment appropriations carried over to year N+1 || (936) || (338) || 0 || (1 274) 
 || Cancellation of unused appropriations carried over from year N-1 || 92 || 171 || 0 || 263 
 || Exchange differences for the year || 60 || (8) || 0 || 52 
 || Budget Result || 1 019 || 12 || 0 || 1 031 
[1] Conclusions of this
audit, based on the final reports and follow-up implemented by the concerned
Member States, were communicated to the Discharge Authority.