Resolution (EU) 2018/1386 of the European Parliament of 18 April 2018 with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Institute of Innovation and Technology for the financial year 2016
Date: 2018-04-18
Institutions: European Parliament
Subjects: European Institute of Innovation and Technology, budgetary discharge, financial year, general budget (EU)








L_2018248EN.01025301.xml










3.10.2018   


EN


Official Journal of the European Union


L 248/253








            RESOLUTION (EU) 2018/1386 OF THE EUROPEAN PARLIAMENT
         
of 18 April 2018
         
with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Institute of Innovation and Technology for the financial year 2016


THE EUROPEAN PARLIAMENT,






—


having regard to its decision on discharge in respect of the implementation of the budget of the European Institute of Innovation and Technology for the financial year 2016,










—


having regard to the Court of Auditors' Special Report No 4/2016: ‘The European Institute of Innovation and Technology must modify its delivery mechanisms and elements of its design to achieve the expected impact’;










—


having regard to Rule 94 of and Annex IV to its Rules of Procedure,










—


having regard to the report of the Committee on Budgetary Control (A8-0096/2018),










A.


whereas in the context of the discharge procedure, the discharge authority stresses the particular importance of further strengthening the democratic legitimacy of the Union institutions by improving transparency and accountability, implementing the concept of performance-based budgeting and good governance of human resources;










B.


whereas, according to its statement of revenue and expenditure (1), the final budget of the European Institute of Innovation and Technology (the ‘Institute’) for the financial year 2016 was EUR 293 796 532,54, representing an increase of 4,51 % compared to 2015; whereas the overall contribution of the Union to the Institute's budget for 2016 amounted to EUR 252 158 953,03;










C.


whereas the Court of Auditors (the ‘Court’), in its report on the Institute’s annual accounts for the financial year 2016 (the ‘Court’s report’), states that it has obtained reasonable assurances that the Institute's annual accounts are reliable and that the underlying transactions are legal and regular;






Follow-up of the 2012, 2014 and 2015 discharges









1.


Deeply regrets the number of outstanding issues and ongoing corrective measures in response to the Court’s comments in 2012, 2014 and 2015 related in particular to funding condition, ex-ante verification of cost statements, funding from public and private sources, unused appropriations, financial autonomy, the respect of the principle of sound financial management; urges the Institute to complete the corrective actions as soon as possible in 2018;












2.


Considers that the possibility to grant discharge in the coming years will be compromised if efficient actions are not taken and effective results are not achieved without further delay;





Budget and financial management









3.


Notes that, according to the Institute’s final accounts, its budget monitoring efforts during the financial year 2016 resulted in a budget implementation rate of 95 %, representing a significant increase compared to the previous year (compared to 90,58 % in 2015); notes that the payment appropriations execution rate was high at 99 %, representing an increase of 3,41 % compared to 2015;





Commitments and carry-overs









4.


Notes from the Court’s report that the level of carry-overs for committed appropriations for Title II was high, at 40 % (EUR 400 000), compared to 44 % in 2015; acknowledges that those carry-overs relate mainly to contracts for IT services going beyond year-end and for meetings for which invoices had not yet been received;












5.


Notes that carry-overs may often be partly or fully justified by the multiannual nature of the agencies’ operational programmes, do not necessarily indicate weaknesses in budget planning and implementation, and are not always at odds with the budgetary principle of annuality, in particular if they are planned in advance and communicated to the Court;





Staff policy









6.


Regrets that, according to the Court’s report, the Institute had four directors from its creation in 2008 until July 2014; observes that since August 2014 the position of director, and, since February 2013, another managerial position, have been filled on an ad interim basis; endorses the Court’s comment that this is not only in contradiction with the one-year maximum period set for interim placements in the Staff Regulations, but also that the frequent changes and long interim solutions cause uncertainty to stakeholders and strategic continuity; acknowledges the Institute’s reply that it is not in a position to comment on the recruitment procedure for the Institute’s director, as that is managed by the Commission; strongly urges the Commission to finalise this outstanding procedure; notes that the Institute will complete the recruitment of the other management position post in 2017;












7.


Notes that in 2016 the Institute recruited 15 staff and one seconded national expert, which brought the total number of staff to 59 on 31 December 2016, corresponding to an increase of nine compared to 31 December 2015, with six ongoing selection processes;












8.


Observes from the Institute’s establishment plan that 36 posts (out of 39 posts authorised under the Union budget) were occupied on 31 December 2016, compared to 39 on 31 December 2015;












9.


Notes with satisfaction that by reference to the number of posts occupied on 31 December 2016, there is almost gender balance among staff, with 56 % female to 44 % male staff; notes, however, with some concern, that the gender ratio of the Management Board is 36 % to 64 %;












10.


Stresses that work-life balance should be part of the Institute’s staff policy; stresses that the budget spent on well-being activities amounts to approximately EUR 226 per member of staff, corresponding to 0,5 day per member of staff; observes that the average number of sick leave is 11,67 days per member of staff;












11.


Supports the training and information sessions on ethics and integrity, including the fight against harassment organised to increase staff awareness; suggests regularly organising training and information sessions;












12.


Notes with satisfaction the fact that the Institute did not receive any complaints, law-suits or reported cases linked to hiring or dismissal of staff in 2016;












13.


Notes that the majority of posts belong to the operational or neutral activities (70 %), whereas the administrative support and coordination roles correspond to 30 % of all posts;





Procurement









14.


Acknowledges from the Institute that it is structurally understaffed, as confirmed in the Court’s Special Report No 4/2016; notes that the amount of grant managed per person at the Institute is significantly higher than for any other Union research grant programme: while the budget managed per staff member under the Seventh Framework Programme was between EUR 12 500 000 and EUR 20 400 000, the Institute project officers manage annual grants up to EUR 90 000 000; notes that the resulting high workload and responsibility may increase staff turnover affecting the Institute’s core business;












15.


Notes that, for the 2016 period, grants were awarded and grant agreements were signed in April 2016; acknowledges that despite an improvement in 2016, the delays in grant award decisions and signatures create uncertainty and undermine partners’ willingness to commit resources and to start activities at the beginning of the year;












16.


Notes that the latest calls for new knowledge and innovation communities (KICs), for which the thematic areas were defined in the strategic innovation agenda of the Institute for the years 2014 to 2020 showed limited competition; notes that the 2016 call for two additional KICs (food and added-value manufacturing) received three proposals, whereby the single proposal for added-value manufacturing KIC was not selected for quality reasons; notes that an excellent partnership has been designated except for EIT Manufacturing; notes with satisfaction that the Institute has concluded on several mitigating measures, which will reduce the risk of receiving only one proposal for a theme in the future; calls on the Institute to report to the discharge authority on the content and efficiency of those measures; notes that the Commissioner for Research, Science and Innovation introduced in 2015 the concept of ’Open Innovation’ as the key policy concept to frame innovation policy at Union level; considers that it is not clear which role the Institute plays in this concept; emphasises that this concept does not provide a clear framework for the development of a coherent and coordinated action by the Commission, given the number of policies and instruments in the mix and number of Directorate-Generals involved in supporting the innovation; calls on the Commission to ensure a coordinated and efficient innovation policy, in which the responsible Directorate-Generals tune up the activities and instruments, and to inform Parliament on those efforts; understands the Institute’s mission to promote cooperation among higher education, research and innovation; takes the view that companies may be in the end the main beneficiary as being the legal owner of the innovate product being brought to the market and have the financial profits; stresses the need in this situation to incorporate in the cooperation-model a structure in which given funds will flow back to the Institute;












17.


Regrets that, according to the Court’s report, KIC legal entities' procurements of up to EUR 2 200 000 were considered to be irregular in 2016 and proved to have significant shortcomings in their procurement procedures;





Main achievements









18.


Welcomes the three main achievements identified by the Institute in 2016, namely that:






—


its first three Innovation Communities (EIT InnoEnergy, EIT Climate-KIC and EIT Digital) reached full maturity and deliver an increasing number of innovative products, services and skilled entrepreneurial talents from its education programmes;










—


it became Europe’s largest innovation network that makes a significant contribution to Europe’s competitiveness, growth and job creation, bringing Union level value added to the European innovation landscape;










—


it implemented the EIT Regional Innovation Scheme as an important element of the EIT Community’s outreach strategy, financed from grants earmarked by the Institute and involving stakeholders from 16 additional European countries, mostly from Central and Eastern Europe, which were not previously engaged in the Institute’s activities;









Internal controls









19.


Notes with concern that the Court found weaknesses in relation to ex-post verifications of procurement procedures carried out by KIC legal entities; notes that the Court concluded differently on the legality and regularity of two procurement procedures, where the Institute accepted the direct award or excessive extension of contracts and considered the related transactions legal and regular;












20.


Acknowledges that the Institute has set up internal control processes intended to ensure the adequate management of risks relating to the legality and regularity of the underlying transactions, including ex-ante verification, specific ex-ante measures applied to grant transactions and ex-post verification;












21.


Notes that in 2016, three exception reports and twelve non-compliance events were recorded, for a total value of EUR 5 654 245 (compared to EUR 7 140 586 in 2015); notes, however, that EUR 5 500 000, representing 99,7 % of the total value, related to a single event, namely an administrative delay of the legal basis that has been corrected in 2016; acknowledges that the Institute has put in place mitigating measures to address the internal control weaknesses identified in the exception reports and non-compliance events registered during 2016, for instance, the Institute continuously updates and improves its financial circuits, workflows, checklists and routing slips;





Anti-fraud strategy









22.


Observes that the Institute has developed an anti-fraud strategy for the period of 2015 to 2017, which includes an internal survey on antifraud knowledge among the staff, benchmarking the antifraud awareness, a mandatory in-house anti-fraud training, an annual assessment on conflicts of interests situations for members of the Institute governing board was performed and related mitigating measures were identified and implemented when required;





Internal audit









23.


Notes that the internal audit service carried out an audit in April 2016 on ‘Transition to Horizon 2020’, which covered the legal transition to the Horizon 2020 rules and regulations as well as the start-up grants provided to the two second-wave KICs designated in 2014; notes that the final audit report was issued in December 2016 with three recommendations, none of them being critical; notes that the Institute accepted the recommendations and set up an action plan which will be implemented in 2017;












24.


Notes that the Institute’s governing board approved the 2016 annual audit plan proposed by the internal audit capability (IAC); notes that the IAC carried out three assignments in 2016, including an audit on information technology (IT), a consultancy on potential efficiency gains in the field of human resources management and a follow-up to past consultancy assignments; notes that the IAC issued 41 new recommendations in 2016, including 8 rated as ‘very important’, 11 as ‘important’ and 22 as ‘desirable’ and that the Institute’s management has accepted all recommendations resulting from the 2016 IAC assignments;





Prevention and management of conflicts of interests, transparency and democracy









25.


Acknowledges that the Institute’s whistleblowing policy is being drafted and will be sent to the European Data Protection Supervisor for a prior check before it is adopted by the Institute’s governing board; notes, moreover, that the upcoming policy will contain a channel for anonymous internal reporting; asks the Institute to keep the discharge authority informed of its progress with regard to this matter;












26.


Acknowledges that, in July 2017, the Institute adopted a new policy on the selection of independent external experts, which addresses the implementation of Article 89 of Regulation (EU) No 1271/2013 regarding the sources of selection, the treatment of recommendations and provides for conflict of interest criteria;












27.


Notes that the Institute will put in place a detailed and proactive transparency policy related to its contacts with stakeholders as part of its annual work programme 2018; asks the Institute to keep the discharge authority informed of progress with regard to this matter;












28.


Notes with satisfaction the organisation of in-house training sessions including on ethics and integrity, fraud prevention and detection, project management, key performance indicators and Horizon 2020 on financial management and audit;












29.


Regrets that the Institute does not make public the minutes of its management board meetings; calls on the Institute to change its policy in that regard;





Other comments









30.


Notes that in 2016, the Court published two special reports affecting the Institute: Special Report No 4/2016 ‘The European Institute of Innovation and Technology must modify its delivery mechanisms and elements of its design to achieve the expected impact’, which was published on 14 April 2016, and Special Report No 12/2016 ‘Agencies’ use of grants: not always appropriate or demonstrably effective’, which was published on 21 April 2016; notes with satisfaction that measures have been taken to implement the Court’s recommendations;












31.


Notes that the original target set by the Commission for the Institute to obtain financial autonomy was 2010; notes, furthermore, that the Institute obtained a partial financial autonomy in June 2011, under the condition of continued ex ante approval of grant related transactions and of procurements above EUR 60 000 by the Commission’s Directorate-General for Education and Culture; acknowledges that the Institute requested the Commission to re-launch the process leading to full financial autonomy; acknowledges, furthermore, that the Commission set out the roadmap and timetable of the process in May 2016 and that the Institute submitted a completed self-assessment to the Commission in October 2016; calls on the Institute to report to the discharge authority on progress;












32.


Notes that the Commission has created a Horizon 2020 common support centre in order to ensure coherence among bodies implementing the programme covering aspects such as legal services, IT tools, grant management, dissemination and exploitation of research results; notes, however, that the Institute has no direct access to the support centre but needs approval on a case-by-case basis from its Commission parent Directorate-General; acknowledges that this limitation affects the efficiency of the Institutes operations;












33.


Refers, for other observations of a cross-cutting nature accompanying its decision on discharge, to its resolution of 18 April 2018 (2) on the performance, financial management and control of the agencies.






(1)  
            OJ C 84, 17.3.2017, p. 205.

(2)  Texts adopted, P8_TA(2018)0133 (see page 393 of this Official Journal).