Financial statements of the European Court of Auditors for the financial year 2012
Date: 2013-10-04
Institutions: European Court of Auditors
Subjects: European Court of Auditors, balance sheet, budget, financial analysis, financial control, financial situation








C_2013288EN.01000101.xml










4.10.2013   


EN


Official Journal of the European Union


C 288/1





FINANCIAL STATEMENTS OF THE EUROPEAN COURT OF AUDITORS FOR THE FINANCIAL YEAR 2012
2013/C 288/01

TABLE OF CONTENTS

Certification for the final accounts 2012 of the European Court of Auditors
Independent auditor’s report
Financial statements and explanatory notes
Balance sheet as of 31 December 2012
Economic outturn account for the year ended 31 December 2012
Cash flow table for the year ended 31 December 2012
Statement of changes in net assets for the year ended 31 December 2012
Accounting policies and notes to the financial statements






1.

General









2.

Legal basis and accounting rules









3.

Notes to the balance sheet









4.

Notes to the economic outturn account









5.

Other significant disclosures



Budget information — financial year 2012






A

Computation of the budget result









B

Reconciliation of the economic outturn with the budget result



Independent assurance report

Certification for the final accounts 2012 of the European Court of Auditors

The annual accounts of the European Court of Auditors for the year 2012 have been prepared in accordance with the Financial Regulation applicable to the general budget of the European Union and the accounting rules adopted by the Commission’s Accounting Officer, as are to be applied by all the institutions, agencies and joint undertakings.
I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Court of Auditors in accordance with art 68 of the Financial Regulation.
I have obtained from the authorising officer, who certified its reliability, all the information necessary for the production of the accounts that show the European Court of Auditors’ 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, I have a reasonable assurance that the accounts present fairly, in all material aspects, the financial position, the results of the operations and the cash-flow of the European Court of Auditors.

Luxembourg, 31 May 2013

Isidoro RODRÍGUEZ DE LAS PARRAS

Accounting Officer of the European Court of Auditors





INDEPENDENT AUDITOR’S REPORT

To the Management of the


European Court of Auditors

We have audited the accompanying financial statements of the European Court of Auditors, which comprise the balance sheet as at 31 December 2012, the economic outturn account, the cash flow table and the statement of changes in net assets and for the year then ended and a summary of significant accounting policies and other explanatory notes, which starts on page 4 and ends on page 16.


Management’s responsibility for the financial statements


The Management is responsible for the preparation and fair presentation of these financial statements in accordance with provisions of Council Regulation (EU, Euratom) No 966/2012 of 25 October 2012 on the Financial Regulation applicable to the general budget of the Union and with the Commission delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of the Financial Regulation, and for such internal control as the Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


Responsibility of the “Réviseur d’entreprises agréé”


Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier”. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the judgment of the “Réviseur d’entreprises agréé” including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the “Réviseur d’entreprises agréé” considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


Opinion


In our opinion, the financial statements give a true and fair view of the financial position of the European Court of Auditors as of 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with provisions of Council Regulation (EU, Euratom) No 966/2012 of 25 October 2012 on the Financial Regulation applicable to the general budget of the Union and with the Commission delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of the Financial Regulation

Luxembourg, 3 June 2013


PricewaterhouseCoopers, Société coopérative


Represented by

Pierre KRIER





FINANCIAL STATEMENTS AND EXPLANATORY NOTES

Balance sheet as of 31 December 2012









(euro)




 


Note


31 December 2012


31 December 2011





Non-current assets





Intangible assets


3.1.


2 271 343


799 634




Property, plant and equipment


3.2.


95 437 237


55 724 407




Long-term receivables


 


25


25




 


 



97 708 605




56 524 066






Current assets





Short-term receivables


3.3.


1 587 108


423 944




Cash and cash equivalents


3.4.


23 625 043


48 109 130




 


 



25 212 151




48 533 074





Total assets


 


122 920 756


105 057 140





Non-current liabilities





Employee benefits


3.5.


58 935 308


53 664 443




Other long-term liabilities


3.6.


175 000


175 000




 


 



59 110 308




53 839 443






Current liabilities





Short-term provisions


3.7.


3 066 916


898 000




Accounts payable


3.8.


23 702 306


10 858 973




 


 



26 769 222




11 756 973





Total liabilities


 


85 879 530


65 596 416





Net assets



 



37 041 227




39 460 724





Accumulated surplus/deficit


 


39 460 724


33 044 880




Economic outturn for the year


 


(2 419 498)


6 415 844





Net assets



 



37 041 226




39 460 724





The accompanying notes form an integral part of these financial statements.

Economic outturn account for the year ended 31 December 2012









(euro)




 


Note


2012


2011




Funds transferred from the Commission to other institutions


4.1.


117 795 049


115 620 434




Revenue from administrative operations


4.2.


19 304 343


19 079 500




Other operating revenue


4.3.


45 439


38 707




Total operating revenue


 


137 144 831


134 738 641




Staff expenses


4.5.


(103 441 065)


(99 838 855)




Assets related expenses


3.1.-3.2. and 4.6.


(3 351 126)


(2 894 307)




Other administrative expenses


4.7.


(23 543 939)


(22 109 488)




Operational expenses


4.8.


(18 586)


(52 733)




Total operating expenses


 


(130 354 716)


(124 895 383)





Surplus/(deficit) from operating activities



 



6 790 116




9 843 258





Financial revenue


4.9.


59 336


380 229




Financial expenses


4.10.


(20 025)


(20 025)




Movement in pensions (– expense, + revenue)


3.5. and 4.11.


(9 248 924)


(3 787 618)





Surplus/(deficit) from non operating activities



 



(9 209 613)




(3 427 414)






Economic outturn of the year



 



(2 419 498)




6 415 844





The accompanying notes form an integral part of these financial statements.

Cash flow table for the year ended 31 December 2012








(euro)




 


2012


2011





Economic outturn of the year




(2 419 498)




6 415 844






Operating activities — adjustments





Amortisation


209 828


244 685




Depreciation


3 139 253


2 646 567




Increase/(decrease) in provisions for risks and charges


2 168 917


898 000




(Increase)/decrease in short-term receivables


(1 164 040)


99 583




(Increase)/decrease in receivables EU entities


876


7 712




Increase/(decrease) in accounts payable


12 852 333


3 176 197




Increase/(decrease) in liabilities related to EU entities


(9 000)


22 218




Net cash flow from operating activities


14 778 669


13 510 806





Cash flows from investing activities





Purchase of tangible and intangible assets (–)


(44 535 664)


(21 019 575)




Proceeds from tangible and intangible assets (+)


2 043


3 055




Net cash flow from investing activities


(44 533 621)


(21 016 520)





Increase/(decrease) in employee benefits




5 270 865




347 058






Net increase/(decrease) in cash and cash equivalents




(24 484 087)




(7 158 656)






Cash and cash equivalents at the beginning of the year



48 109 130


55 267 786





Cash and cash equivalents at the end of the year



23 625 043


48 109 130




The accompanying notes form an integral part of these financial statements.

Statement of changes in net assets for the year ended 31 December 2012








(euro)




Net assets


2012


2011





Balance at the start of the year




39 460 724




33 044 880





Economic outturn of the year


(2 419 498)


6 415 844





Balance at the end of the year



37 041 226


39 460 724




The accompanying notes form an integral part of these financial statements.

Accounting policies and notes to the financial statements

1.   
General


The European Court of Auditors (hereafter the ‘Court’) was established by the Treaty of Brussels of 22 July 1975 and started operating as an external Union audit body in October 1977, with its headquarters in Luxembourg.

Mission of the European Court of Auditors

The Court is the EU Institution established by the Treaty to carry out the audit of EU finances. As the EU external auditor it contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the European Union.
The Court renders audit services through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. The Court communicates the results of its audits in clear, relevant and objective reports. It also provides its opinion on financial management issues.
The Court promotes accountability and transparency and assists the European Parliament and Council in overseeing the implementation of the EU budget, particularly during the discharge procedure. The Court is committed to being an efficient organisation at the forefront of developments in public audit and administration.
The financial year of the Court runs from 1 January to 31 December.
2.   
Legal basis and accounting rules


2.1.   Basis of presentation

The accounts of the Court are drawn up in accordance with the provisions of Council Regulation (EU, Euratom) No 966/2012 of 25 October 2012 on the Financial Regulation applicable to the general budget of the Union and with the Commission delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of the Financial Regulation.
2.2.   Accounting principles

According to Article 144 of the Financial Regulation, the financial statements shall present information, including information on accounting policies, in a manner that ensures it is relevant, reliable, comparable and understandable. The budgetary accounts shall respect the budgetary principles laid down in the Financial Regulation. They shall present a true and fair view of the budgetary revenue and expenditure operations.
The financial statements are drawn up in accordance with the accounting rules of the European Union (EU accounting rules), based on internationally accepted accounting standards for the public sector. These accounting rules are adopted by the Accounting Officer of the Commission after a consultation of the other institutions.
2.3.   Valuation of foreign currency balances and transactions

Foreign currency transactions are translated into euro using the exchange rate prevailing at the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the economic outturn account.
Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euro on the basis of the exchange rates applying on 31 December.
2.4.   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 four years. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met. The costs that can be capitalised 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, not capitalised development costs and maintenance costs are recognised as expenses as incurred.
2.5.   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 Court and its cost can be measured reliably. Repairs and maintenance costs are charged to the economic outturn account during the financial period in which they are incurred. As the Court does not borrow money to fund the acquisition of property, plant and equipment, there are no borrowing costs related to such purchases.
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:






Buildings


25 years or expected useful life




Plant, machinery and tools


4, 8 years




Furniture and vehicle fleet


4, 8, 10 years




Computer hardware


4 years




Fittings specific to leased buildings


the duration of the lease




Other fixtures and fittings


4, 6, 8 years




2.6.   Employee benefits

Employee benefits represent the future pension rights of the Members of the Court in accordance with Article 19 of Council Regulation (EC, Euratom, ECSC) No 2290/77 of 18 October 1977 determining the emoluments of the Members of the Court of Auditors (1), the benefits provided for in this pension scheme are entered in the budget of the Union and the Member States jointly guarantee their payment.
The liability for these future pension payments is accounted and disclosed in accordance with EU accounting rule 12 ‘Employee Benefits’. The methodology to calculate the liability takes account of characteristics of the pension scheme as defined in accounting rule IPSAS 25.
IPSAS 25 requires that the cost of post-employment benefits be assessed in the present (i.e. when the Member acquires his pension rights). The actuarial commitment is determined on an ongoing basis, taking into account both the promised benefits during the active lifetime and foreseeable increase in salaries. The actuarial valuation method used to calculate the liability is ‘the projected unit credit method’.
The liability is reduced by the estimated amount of taxes that will be applied to future pension payments since these taxes revert to the EU budget as revenue.
The pension liability is recomputed every year at reporting date. In the economic outturn account, the pension expense for the year consists of the pensions paid during the year and of the adjustment of the pension liability at year-end, both net of taxes. Actuarial gains and losses are recognised in the ‘economic outturn account’.
Regarding potential ‘plan assets’, the Court does not currently have any assets devoted to financing pension commitments.
2.7.   Provisions

Provisions are recognised when the Court 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.
2.8.   Recognition of expenses

According to the European Union 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 which aim at ensuring that the financial statements reflect a true and fair view.
3.   
Notes to the balance sheet



NON-CURRENT ASSETS

3.1.   Intangible assets

The movements in intangible assets during the year 2012 were:










(euro)




 


Gross carrying amounts 1 January 2012


Additions


Gross carrying amounts 31 December 2012


Accumulated amortisation and impairment 31 December 2012


Net carrying amounts 31 December 2012




Computer Software


1 280 384


122 962



1 403 346



(1 066 430)



336 916





Intangible assets under construction


375 852


1 558 575



1 934 427



 



1 934 427





Total


1 656 236


1 681 537


3 337 773


(1 066 430)


2 271 343




In 2012 no costs associated with research activities were recognised.
3.2.   Property, plant and equipment

The movements in Property, plant and equipment during the year 2012 were:












(euro)




 


Gross carrying amounts 1 January 2012


Additions


Disposals


Transfer


Gross carrying amounts 31 December 2012


Accumulated amortisation and impairment 31 December 2012


Net carrying amounts 31 December 2012




Land


776 631


 


 


 



776 631



 



776 631





Buildings


58 014 262


42 377


 


64 803 349



122 859 988



(32 625 657)



90 234 331





Plant and equipment


301 916


371 089


(20 158)


 



652 847



(205 087)



447 760





Computer hardware


4 334 320


660 234


(263 787)


 



4 730 767



(3 759 898)



970 869





Furniture and vehicle


2 083 118


2 386 015


(22 607)


 



4 446 526



(1 503 520)



2 943 006





Other fixtures and fittings


1 879 098


27 301


(14 571)


 



1 891 828



(1 831 287)



60 541





Tangible assets under construction


25 440 337


39 367 111


—


(64 803 349)



4 099



 



4 099





Total


92 829 682


42 854 127


(321 123)


—


135 362 686


(39 925 449)


95 437 237




The K3 building entered into service on 15 November 2012 and at this date was transferred from ‘Assets under construction’ to ‘Buildings’ (see point 5.3).

CURRENT ASSETS

3.3.   Short-term receivables








(euro)




 


31 December 2012


31 December 2011




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


2 030


4 222




Sundry receivables mainly related to payroll and mission advances


200 942


127 949




Deferred charges for building rentals and IT contracts


1 382 757


289 518




Receivable from EU entities


1 379


2 255




Total


1 587 108


423 944




3.4.   Cash and cash equivalents








(euro)




 


31 December 2012


31 December 2011




Petty cash


1 000


1 000




Bank current account


2 627 191


1 113 170




Fiduciary account


20 996 852


46 994 960




Total


23 625 043


48 109 130




A fiduciary account was opened on 27 January 2010 between the European Court of Auditors and the Banque et Caisse d’Epargne de l’Etat, Luxembourg. This fiduciary account allows the Court to manage the budget granted by the budgetary authority in relation to the K3 building project (see point 5.3).
The fiduciary account is used by the Court only under certain conditions disclosed in the contract with the Banque et Caisse d’Epargne de l’Etat, Luxembourg.
The exclusive beneficiary of payments made from this fiduciary account is the operational bank account of the consortium acting as project manager. This operational account is used exclusively by the project manager to pay the invoices of the construction companies.

NON-CURRENT LIABILITIES

3.5.   Employee benefits

The computation of the liability is performed by Eurostat assisted by a qualified independent expert with regard to the implementation of the methodology and to the definition of the corresponding actuarial assumptions.
The liability for future pension payments obligations is net of the taxes which will be recovered on the future pension payments (see also 2.6).







(euro)




 


31 December 2012


31 December 2011




Gross amount


72 804 580


66 526 128




Tax rate (%) (2)



19,05 %


19,33 %




Taxes


13 869 273


12 861 685





Amount net of taxes




58 935 308




53 664 443






Variation of members’ net pension liability




5 270 865




347 058





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






—


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










—


retirement pension,










—


invalidity pension and allowance,










—


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




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






—


the active members,










—


the non-active members with a transitional allowance,










—


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










—


the retired members,










—


permanently disabled,










—


temporarily disabled,










—


the surviving spouses,










—


the orphans.




The assessment of the pension liability requires the handling of variables related to economic and demographic aspects. The main actuarial assumptions are:







Actuarial assumption


31 December 2011


31 December 2012




Average age difference between married men and women


3 years


3 years




Probability of being married for men


Marital status at reference date


Marital status at reference date




Probability of being married for women


Marital status at reference date


Marital status at reference date




Marital status


Status at the reference date


Status at the reference date




Coefficient for orphan’s and divorced spouse’s pension


0 %


0 %




Assumed retirement age


65


65




Expected inflation rate over the duration of the scheme


1,6 %


1,7 %




Nominal Discount rate (NDR)


4,6 %


3,3 %




Real Discount rate (RDR)


3,0 %


1,6 %




General salary growth (GSG)


0,0 %


0,0 %




General pension revaluation (GPR)


0,0 %


0,0 %




Individual salary progression (ISP)


None (except if new appointment)


None (except if new appointment)




Mortality table healthy people


2008 ICSLT (3)



2008 ICSLT (3)





Mortality table for invalids


Rate corresponding to a healthy person aged of 3 years more


Rate corresponding to a healthy person aged of 3 years more




3.6.   Other long-term liabilities

The amount of 175 000 euro is contractually due at the termination of the rental of the building K9.

CURRENT LIABILITIES

3.7.   Short-term provisions

On 11 January 2012, the Commission decided to bring an action against the Council in the Court of Justice for not adopting the 2011 annual adjustment to remuneration of EU staff. Following this decision a short-term provision has been booked for the outstanding 1,7 % salary payments net of taxes and pension deduction. The same applies for the 2012 salary adjustment of 1,7 % related to the period July-December 2012.
A second short-term provision concerns the outstanding pension contribution reduction probably to be refunded to the staff:






—


As from 1 July 2011 — reduction from 11,6 % to 11,0 %










—


As from 1 July 2012 — further reduction from 11,0 % to 10,6 %




3.8.   Accounts payable








(euro)




 


31 December 2012


31 December 2011




Current payables


445 830


100 012




Sundry payables related to payroll and staff


344 427


478 469




Accrued charges


22 864 727


10 224 170




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


47 322


56 322




Total


23 702 306


10 858 973




4.   
Notes to the economic outturn account








4.1.


‘Funds transferred from the Commission to other institutions’: the amount corresponds to the monthly calls for funds made by the Court to the Commission to replenish its bank account.










4.2.


‘Revenue from administrative operations’: for the most part, this heading is made up of deductions from the salaries of members and staff in respect of tax and social contributions.










4.3.


‘Other operating revenue’ arises among others from exchange rate gains.










4.4.


Revenues were generated from exchange and non-exchange transactions as follows:







(euro)




 


2012


2011




Revenue from exchange transactions


41 910


12 301




Revenue from non-exchange transactions


137 102 921


134 726 340




Total revenue


137 144 831


134 738 641














4.5.


‘Staff expenses’ include the salaries of members, statutory staff, contractual agents and temporary staff. The transitional allowances for previous members and the taxes related to the members’ pensions and transitional allowances are also part of the item ‘Movement in pension’ (see 4.11).










4.6.


The ‘Assets related expenses’ consist of the depreciation/amortisation of the tangible and intangible assets.










4.7.


The most significant items of the ‘other administrative expenses’ were:






—


buildings’ rental and associated charge,










—


IT and telecommunications,










—


missions expenses,










—


cleaning and security services.














4.8.


‘Operational expenses’ arise among others from exchange rate losses.










4.9.


‘Financial revenue’ consist of bank interest earned on the Court’s current and fiduciary accounts.










4.10.


‘Financial expenses’ are bank charges levied on the Court’s current and fiduciary accounts.










4.11.


The item ‘Movement in pensions’ includes all expenses linked to the pensions of the Members of the Court. This covers the pensions and transitional allowances paid during the year and the adjustment at year end of the liability for all future pension payments which explains the difference between the two years.







(euro)




 


2012


2011





Variation of members’ net pension liability




5 270 865




347 058





Life pension paid


2 590 511


2 506 455




Survivor pensions paid


350 485


373 724




Transitional allowances paid


1 785 937


1 192 009




Invalidity pensions paid


23 809


71 494





Sub-total pension paid during the year




4 750 742




4 143 682





Correction coefficient


163 476


121 472





Taxes deducted from payments




(936 159)




(824 594)





Total movement in pensions


9 248 924


3 787 618








5.   
Other significant disclosures


5.1.   Contingent assets

The following bank guarantees have been given by suppliers following contractual obligations:







(euro)




 


31 December 2012


31 December 2011




Travel agency


50 000


50 000




Renovation building K1


2 500


2 500




Project management building K3


7 096 680


6 765 339




Car pool leasing


—


60 000




Insurance company


1 361


—




Telecommunication


20 000


20 000




Total


7 170 541


6 897 839




5.2.   Commitments for future funding








(euro)




 


31 December 2012


31 December 2011




Operational lease for buildings


2 579 580


6 336 852




Operational lease for IT material, cars and other equipment


1 044 344


862 449




Subtotal


3 623 924


7 199 301




Commitments against appropriations not yet consumed — RAL (Restant à liquider) — after deduction of accruals for 2012


1 385 871


8 258 004




Total


5 009 795


15 457 305




The RAL is an element of budgetary accounting representing the value of outstanding commitments. This is the difference between commitments entered into and payments, which is due to the time-lag between entering into a commitment and proceeding to the related payment.
5.3.   The Court’s buildings projects

The Court occupied its headquarters building (the ‘K1’ building) in 1988 and purchased it and the land it stands on outright in 1990. In 1999, the Court signed a framework agreement with the Luxembourg State through which it was given the right to use a second parcel of land for 49 years (renewable once) for the construction of an extension (the ‘K2’ building) in return for a payment of one euro. However for the second extension, the ‘K3’ building, due to different arrangements for carrying out the project it was necessary that the Luxembourg State and the Court concluded a new framework agreement on 22 February 2008.
As regards the two pieces of land relative to the two extensions (‘K2’ and ‘K3’) mentioned above, the state has sold these to the Court for a symbolic one euro.
For its part should the Court ever consider ceding one or other of the buildings to a third party other than the Community body or institution, the Court will return the land to the ownership of the State in return for a symbolic one euro, the latter disposing also of an option to buy the building at a price to be determined by an independent expert. In case the state decides not to exercise this option, it would provide a right to use the land to the purchasers of the building.
In Luxembourg, the use of office buildings is authorised for a period of 15 years, after which they must be modernised to bring them into conformity with the prevailing health, safety and environmental standards. These required health and safety works were performed on the K1 building. The work is finalised, the formal final acceptance was confirmed in 2010. The K2 building entered into service in November 2003 and has thus an authorisation (‘autorisation d’exploitation’) valid until 2018.
The works for the construction of the K3 building started in March 2010. The first tranche amounted to 55 million euro, the second tranche amounted to 11 million euro, the third tranche in 2011 amounted to 7 million euro and the first part of the fourth tranche in 2012 amounted 3 million. Part of this fourth tranche was spent in 2012 and the difference is included in the ‘Restant à liquider’ (see point 5.2).
On 15 June 2009 following an open call for tender, the Court signed a service contract with a consortium to be the project manager for the construction of the K3 building. Amongst other things it is the responsibility of the project manager to procure and sign contracts with the construction companies on behalf of the Court, to monitor the execution of the works and to check the relevant invoices before payment. Once the invoices are verified and authorised for payment by the responsible services of the Court it is the responsibility of the project manager to pay the construction companies. Within the above context, the project manager enters into financial commitments towards the construction companies. As a counter-balance to this, the contract between the Court and the project manager requires the Court to have sufficient funds, within the limits of what is available in the budget, to cover the liabilities of the project manager vis-à-vis the construction companies. To ensure this, the Court has signed a fiduciary contract with a local bank and thus holds the funds made available by the budgetary authority. The financial interest of the Union is at the same time protected by the use of the fiduciary contract.
On 15 November 2012 the K3 building entered into service.
5.4.   Potential significant liability for litigations
 (4)

None.


(1)  OJ L 268, 20.10.1977, p. 1.

(2)  Rounded.

(3)  International Civil Servants Life Table.

(4)  EU accounting rule No 10 Provisions, contingent liabilities and contingent assets.



BUDGET INFORMATION — FINANCIAL YEAR 2012
A   Computation of the budget result

The budget result of the year is computed based on the figures of the budgetary implementation.






(euro)




Payments on appropriations of the year 2012


(124 667 052)




Payments made from carry-over of payment appropriations


(11 214 098)




Payments on appropriation related to earmarked revenue


(186 884)




Recovery orders of the year, cashed during the year 2012


19 388 466




Budgetary recovery orders issued before 2012 and cashed in the year 2012


5 423




Adjustment on recovery orders from previous years


 




Payment appropriations carried over to 2013


(13 130 039)




Appropriation carried over from previous years


13 087 563




Adjustment for carry-over from previous year of appropriations available at 31 December arising from assigned revenue


474 734




Budget result


(116 241 886)




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







(euro)





Economic outturn account of the year




(2 419 498)







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





(98 042 918)





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


8 519 412




Amount from liaison account with the Commission booked in the economic outturn account


(117 795 049)




Unpaid invoices at year end but booked in charges (class 6)


174 028




Depreciation of intangible and tangible assets


3 351 126




Provisions


 




Value reductions


 




Recovery orders issued in 2012 in class 7 not yet cashed


(1 310)




Payments made from carry-over of payment appropriations


11 214 098




Other


(3 518 922)




Exchange rate differences


13 699






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





(15 779 470)





Asset acquisitions (paid during the year)


(5 003 498)




Budgetary recovery orders issued before 2012 and cashed in the year


5 867




Payment appropriations carried over to 2013


(13 130 039)




Cancellation of unused carried over payment appropriations from previous year


1 873 466




Adjustment for carry-over from previous year of appropriations available at 31 December arising from assigned revenue


474 734




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


 




Other


 




Budget result


(116 241 886)







INDEPENDENT ASSURANCE REPORT

To the Management of the


European Court of Auditors

We have examined that the financial resources assigned by the European Commission to the European Court of Auditors (hereafter the “Court”) have been used for their intended purposes and that the control procedures put in place by the authorising officers provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations for the financial resources made available and used for the year ended 31 December 2012.
The maintenance of books and records and the establishing and maintaining of appropriate controls are the responsibility of the Management of the Court. Our responsibility is to express our opinion based on our examination.
We conducted our examination in accordance with the International Standard on Assurance Engagements “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000) as adopted by the “Commission de Surveillance du Secteur Financier”. This standard requires that we plan and perform our examination such that misuse of the resources materially affecting the books of the Court are detected with reasonable assurance.
Our work consisted primarily of examining on a test and sample basis, evidence supporting the fact that:






—


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










—


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




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






—


Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget (hereafter the “Budget”) of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (hereafter the “Financial Regulation”);










—


Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union (hereafter the “Implementing Rules”);










—


Decision No 6-2012 of the European Court of Auditors concerning the internal rules for the implementation of its Budget adopted by the Court at its meeting of 12 January 2012. These provisions form part of the procedures established by the Treaties, or agreements made by virtue thereof, which concern the operational process linked to the implementation of the Budget.




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






—


Article 7 - Signatures - “Each of the parties involved in the drafting, control and registration of operations to establish and recover revenue or to commit sums and make payments shall sign and date their involvement”;










—


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










—


Article 16 - Making payments - “The accounting officer shall execute the payment orders defined in Article 80 of the Financial Regulation after he has checked the mandatory details described in Article 103(1) and Article 104 of the Implementing Rules”;










—


Article 23.1 - Transfers of appropriations - “Pursuant to Article 21 of the Financial Regulation, appropriations shall be earmarked for specific purposes by title and chapter; the chapters shall be further subdivided into Articles and items”;










—


Article 23.2 - Transfers of appropriations - “All requests for transfer shall explain why the appropriations are insufficient. The request for transfer shall be signed by the responsible director or, in his absence, by the responsible Head of Unit”;










—


Article 24 - Carry-overs of appropriations - “the responsible authorising officer shall prepare a paper or electronic list showing the available balance of commitments; this balance, take from the integrated computer system referred to in Article 27.3 of this Decision, shall, if necessary, be adjusted by taking into consideration the appropriations to be cancelled, and shall show the appropriations to be carried forward”;










—


Article 26 - Property inventories - “The inventory of tangible assets shall be kept in a database”;










—


Article 27 - Minimum management and internal control procedures - “The management and internal control procedures are drawn up by the authorising officers in accordance with the minimum internal control standards adopted by the Court. Each budget operation is handled (…) by the person responsible for ex-ante verification. (…) The staff responsible for ex ante verification shall respect the code of professional conduct established by the Court for the ex ante verification function, as well as the procedures established by the authorising officer”.




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






—


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










—


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




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

Luxembourg, 3 June 2013


PricewaterhouseCoopers, Société coopérative


Represented by

Pierre KRIER