Source: EURLEX
Language: en
Format: md

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| 17.12.2013 | EN | Official Journal of the European Union | C 369/10 |

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REPORT

on the annual accounts of the Clean Sky Joint Undertaking for the financial year 2012, together with the Joint Undertaking’s replies

2013/C 369/02

CONTENTS

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|  | Paragraph | Page |
| Introduction … | 1-5 | 11 |
| Information in support of the statement of assurance … | 6 | 11 |
| Statement of assurance … | 7-14 | 11 |
| Opinion on the reliability of the accounts … | 12 | 12 |
| Opinion on the legality and regularity of the transactions underlying the accounts … | 13 | 12 |
| Comments on budgetary and financial management … | 15 | 12 |
| Implementation of the budget … | 15 | 12 |
| Comments on key controls of the Joint Undertaking’s supervisory and control systems … | 16-19 | 12 |
| Other matters … | 20-26 | 13 |
| Internal audit function and the Commission’s Internal Audit Service … | 20-22 | 13 |
| Monitoring and reporting of research results … | 23-25 | 13 |
| Follow-up of previous observations … | 26 | 13 |

INTRODUCTION

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| 1. | The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007[(1)](#ntr1-C_2013369EN.01001001-E0001) for a period of 10 years. |

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| 2. | The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air-transport technologies in the EU for earliest possible deployment[(2)](#ntr2-C_2013369EN.01001001-E0002). The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘Integrated Technology Demonstrators’ (ITDs). |

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| 3. | The founding members of the Joint Undertaking are the European Union, represented by the Commission, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs. |

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| 4. | The maximum EU contribution to the Clean Sky Joint Undertaking, to cover running costs and research activities, is 800 million euro to be paid from the budget of the Seventh Framework Programme[(3)](#ntr3-C_2013369EN.01001001-E0003). Other members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions. |

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| 5. | The Joint Undertaking started working autonomously on 16 November 2009. |

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

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| 6. | The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and an assessment of key controls of the supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |

STATEMENT OF ASSURANCE

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| 7. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:   |  |  | | --- | --- | | (a) | the annual accounts of the Clean Sky Joint Undertaking, which comprise the financial statements[(4)](#ntr4-C_2013369EN.01001001-E0004) and the reports on the implementation of the budget[(5)](#ntr5-C_2013369EN.01001001-E0005) for the financial year ended 31 December 2012; and |  |  |  | | --- | --- | | (b) | the legality and regularity of the transactions underlying those accounts. | |

The management’s responsibility

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| 8. | In accordance with Articles 33 and 43 of Commission Regulation (EC, Euratom) No 2343/2002[(6)](#ntr6-C_2013369EN.01001001-E0006), the management is responsible for the preparation and fair presentation of the annual accounts of the Joint Undertaking and the legality and regularity of the underlying transactions.   |  |  | | --- | --- | | (a) | The management’s responsibilities in respect of the Joint Undertaking's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer[(7)](#ntr7-C_2013369EN.01001001-E0007), and making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Joint Undertaking after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Joint Undertaking in all material respects. |  |  |  | | --- | --- | | (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. | |

The auditor’s responsibility

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| 9. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council[(8)](#ntr8-C_2013369EN.01001001-E0008) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Joint Undertaking are free from material misstatement and the underlying transactions are legal and regular. |

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| 10. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |

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| 11. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |

Opinion on the reliability of the accounts

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| 12. | In the Court’s opinion, the Joint Undertaking’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2012 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules and the accounting rules adopted by the Commission’s accounting officer |

Opinion on the legality and regularity of the transactions underlying the accounts

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| 13. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2012 are, in all material respects, legal and regular. |

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| 14. | The comments which follow do not call the Court’s opinion into question. |

COMMENTS ON BUDGETARY AND FINANCIAL MANAGEMENT

Implementation of the budget

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| 15. | The 2012 final amending budget included commitment appropriations of 205,4 million euro and payment appropriations of 167,9 million euro. The utilisation rate for commitment appropriations was 84 %, while the rate for payment appropriations was 75 %[(9)](#ntr9-C_2013369EN.01001001-E0009). The lower rate for payment appropriations reflects delays in the implementation of the budget, mainly as a result of delays in the implementation of activities[(10)](#ntr10-C_2013369EN.01001001-E0010) and in the period between the publication of calls for proposals and the signing of grant agreements[(11)](#ntr11-C_2013369EN.01001001-E0011). |

COMMENTS ON KEY CONTROLS OF THE JOINT UNDERTAKING’S SUPERVISORY AND CONTROL SYSTEMS

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| 16. | During 2012 the Joint Undertaking further improved its management, administrative, financial and accounting procedures. One of the main achievements in 2012 was the implementation of the ‘GMT tool’, a specific application for managing financial information relating to the implementation of grant agreements with members. However, the GMT tool still presents some limitations as regards the completeness of the operational information managed[(12)](#ntr12-C_2013369EN.01001001-E0012). |

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| 17. | With regard to the ex ante control of cost claims submitted by Clean Sky members, the audit certificates accompanying the cost claims of two beneficiaries were found to include reservations about the contracts of the staff employed on the project; in one of them the audit certificate also included reservations on the indirect cost rates applied. Despite these significant exceptions, the Joint Undertaking released the payments. |

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| 18. | The following weaknesses were noted in respect of the ex ante control of cost claims submitted by Clean Sky partners:   |  |  | | --- | --- | | — | the checklists used for the ex ante control of cost claims were not always complete, |  |  |  | | --- | --- | | — | the verifying officers did not prepare technical acceptance reports on the partners’ activities, |  |  |  | | --- | --- | | — | in at least one case, the tasks of financial verification and authorisation were performed by the head of administration, which is contrary to the provisions of the financial procedures manual and the principle of segregation of duties, |  |  |  | | --- | --- | | — | the Joint Undertaking’s partners are generally late in submitting cost claims. At the time of the audit, at least 70 out of 292 cost claims had not been submitted to the Joint Undertaking on time. In 15 cases, the delay exceeded one year. | |

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| 19. | The recommendations made in the accounting officer’s 2012 validation of the underlying systems need to be duly followed up[(13)](#ntr13-C_2013369EN.01001001-E0013). |

OTHER MATTERS

Internal audit function and the Commission’s Internal Audit Service

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| 20. | In 2012, resource constraints within the organisation and the launch of the first ex post audit exercise compelled the internal auditor to focus on the Joint Undertaking’s core processes, including the preparation of the 2012 accounts. As a result, the audit tasks scheduled in the 2012 audit plan could not be completed. A similar situation was reported by the Court in 2011[(14)](#ntr14-C_2013369EN.01001001-E0014). |

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| 21. | In 2012, the Commission’s Internal Audit Service audited the annual planning process for the management of grants[(15)](#ntr15-C_2013369EN.01001001-E0015). The audit concluded that the existing internal control system gave reasonable assurance as to the achievement of the business objectives set for this process, except for two very important reservations concerning delays in the implementation of the programme and the system for evaluating the utilisation of resources[(16)](#ntr16-C_2013369EN.01001001-E0016). |

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| 22. | The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 31 March 2011. However, the Joint Undertaking’s financial rules have not yet been amended to include the provisions of the framework Regulation[(17)](#ntr17-C_2013369EN.01001001-E0017) referring to the powers of the Commission’s internal auditor. |

Monitoring and reporting of research results

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| 23. | The Seventh Framework Programme (FP7) establishes a monitoring and reporting system covering the protection, dissemination and transfer of research results[(18)](#ntr18-C_2013369EN.01001001-E0018). |

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| 24. | In the grant agreements signed with beneficiaries, the Joint Undertaking has included specific provisions governing intellectual property rights and the dissemination of research results. Implementation of these provisions is monitored by the Joint Undertaking at different stages of the funded projects. |

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| 25. | Nevertheless, the way the results of this monitoring are reported needs to evolve further to meet the objectives of Article 7 of Decision No 1982/2006/EC[(19)](#ntr19-C_2013369EN.01001001-E0019) and Article 27 of Regulation (EC) No 1906/2006[(20)](#ntr20-C_2013369EN.01001001-E0020). |

Follow-up of previous observations

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| 26. | Significant progress has been made as regards the IT aspects of the Joint Undertaking’s business continuity plan and disaster recovery plan. According to the Joint Undertaking, these plans will be completed by the end of 2013. |

This Report was adopted by Chamber IV, headed by Dr Louis GALEA, Member of the Court of Auditors, in Luxembourg at its meeting of 22 October 2013.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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