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PURPOSE: presentation by the Commission of the consolidated annual accounts of the European Union for the financial year 2010, as part of the 2010 discharge procedure.

Analysis of the accounts of the EU Institutions: Section V - Court of Auditors.

CONTENT: this Commission document sets out the consolidated annual accounts of the European Union for the financial year 2010 as prepared on the basis of the information presented by the institutions, organisations and bodies of the EU, in accordance with Article 129 (2) of the Financial Regulation applicable to the EU's General Budget, including the Court of Auditors.

(1) Purpose: the document helps to bring insight into the EU budget mechanism and the way in which the budget has been managed and spent in 2010. It recalls that European Union'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.

In accordance with the Financial Regulation, the Commission implements the general budget using the following methods: direct centralised management: direct implementation of the budget by the Commission services; indirect centralised management: 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: 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 "Shared Management" involving the delegation of tasks to Member States, covering such areas as agricultural spending and Structural Actions.

The document also presents the different financial actors involved in the budget process (accounting officers, internal officers and authorising officers) and recalls their respective roles in the context of the tasks of sound financial management.

Amongst the other legal elements relating to the implementation of the EU budget presented in this document, the paper focuses on the following issues:

• accounting principles applicable to the management of EU spending (business continuity, consistency of accounting methods, comparability of information ...);
• consolidation methods of figures for all major controlled entities (institutions and agencies);
• the recognition of financial assets in the EU (tangible and intangible assets, financial assets and other miscellaneous investments);
• the way in which EU public expenditure is committed and spent, including pre-financing;
• the means of recovery following irregularities detected;
• the modus operandi of the accounting system:
• the audit process followed by the European Parliament's granting of the discharge.

To recall, the final control is the discharge of the budget for a given financial year. 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 from its responsibility for management of a given budget by marking the end of that budget's existence (please refer to the follow-up reports presented in this procedure file).

Lastly, the document presents a series of tables and detailed technical indicators on (i) the balance sheet; (ii) the economic outturn account; (iii) cashflow tables; (iv) technical annexes concerning the financial statements.

Implementation of appropriations under Section V of the budget for the financial year 2010: the document comprises a series of detailed tables, the most important concerning the implementation of the budget. As regards the Court of Auditor's expenditure, the table on the financial and budgetary implementation of this institution shows the following:

A) Table showing the commitment appropriations:

• Commitments: EUR 138 million (93.02% rate of implementation)
• Carry-overs to 2011: (0.26% of authorised appropriations)
• Cancelled: EUR 6 million

B) Table showing the implementation of payments:

• Payments: EUR 182 million (61.35% rate of implementation)
• Carry-overs to 2011: EUR 17 million (7.94% of authorised appropriations)
• Cancellations: EUR 11 million.

Lastly, the annexes detail specific expenditure of the institutions, in particular:

• pensions: an administrative budget heading includes the pension obligations towards the Members and former members of the Court of Auditors;
• 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. This gross liability has been valued at EUR 3 791 million.

(3) Budget implementation – conclusions: the main characteristics of the budget implementation of the Court of Auditors for 2010 were as follows:

• Annual reports on the EU budget and the European Development Funds for the 2009 financial year;
• 40 specific annual reports on the EU’s various agencies and other institutions and bodies for the 2009 financial year;
• 14 special reports , mainly performance audits;
• opinion on improving the financial management of the EU budget;
• five other opinions on new or amended EU legislation, including on the proposal for the revised financial regulation;
• extensive contribution to the international public audit profession and community, including to the development of new standards for supreme audit institutions (iSSAis);
• a pilot project involving coordinated audits with the supreme audit institutions of the Czech Republic and the Netherlands on the regularity of agricultural expenditure;
• recruitment of 97 new employees, resulting in a fall in vacant posts to below 5% for the first time;
• continuing re-deployment of staff to audit as a result of efficiency gains in support services.

For further details on the budgetary implementation of expenditure of Section V of the budget (Court of Auditors), please refer to the Report on budgetary and financial management for 2010 and the Financial Statements for 2010.

The Committee on Budgetary Control adopted the report by Inés AYALA SENDER (S&D, ES) on discharge to be granted to the Secretary-General of the Court of Auditors in respect of the implementation of the budget for the financial year 2010.

Members emphasise that the audit of the Court of Auditors’ financial statements for 2010 was carried out by an external auditor and that this was considered satisfactory.

They call for improvements to be made to the summary of the number and type of internal audits carried out, the recommendations made and the action taken on those recommendations.

In parallel, Members note that in 2010 the Court of Auditors’ commitment appropriations amounted to a total of EUR 148.6 million (EUR 188 million in 2009), and that the implementation rate for those appropriations was 93 % (92.1 % in 2009). They emphasise that the Court of Auditors’ budget is purely administrative in nature, with 80 % of it being spent on persons working within the institution and 20 % on buildings, furniture, equipment and miscellaneous operating expenditure. They welcome the fact that, following a reorganisation, the Court of Auditors has reduced the annual cost of security services by EUR 500 000, while making for more effective delivery of service and better risk control.

Members ask the European Anti-Fraud Office (OLAF) to speed up the investigation related to allegations of irregularities reported by the Court of Auditors to OLAF in 2010.

Regarding the Court of Auditors’ activities, Memebers make the following remarks:

• they suggest that the Court evaluates the effects and the implementation of its conclusions contained in the special reports within a reasonable period of time, informing the Committee on Budgetary Control of its findings;
• they consider that preventing and identifying conflicts of interest is of high relevance for the efficient and correct use of resources as well as for the public confidence in the Union institutions;
• they await the Court of Auditors completion and release of the Special Report on conflicts of interest management in the European Aviation Safety Agency, the European Chemicals Agency, the European Food Safety Authority and the European Medicines Agency;
• they invite the Court of Auditors to provide the discharge authority with a Special Report on the effectiveness of the Joint Undertakings’ establishment and on their added value for the efficient execution of Union research, technological development and demonstration programmes.

Members consider that for additional optimisation of the Court of Auditors’ activity, an even more substantial number of the Court’s officials should be specialised in, and performing exclusively audit tasks. They hope to see an increase of this proportion in the future. They request the Court of Auditors to incorporate into its future work programmes a systematic follow-up of specific past audits, following a sufficient time lapse, to assess progress.

Members encourage the Court to perform an in-depth assessment of supervisory and control systems in the Council before the end of 2012 and awaits with interest the ‘follow-up peer review’ that the Court of Auditors intends to launch in 2012. They confirm their intention to propose a revision of the rules on appointing candidates to the Court of Auditors, with a view to improving the requirements so that the Court is better equipped to deal with current and future challenges.

En adoptant le rapport d’Inés AYALA SENDER (S&D, ES), la commission du contrôle budgétaire appelle le Parlement européen à octroyer la décharge au Secrétaire général de la Cour des comptes sur l'exécution du budget de la Cour pour l'exercice 2010.

Les députés soulignent que l'audit des états financiers de la Cour des comptes en 2010 a été effectué par un auditeur externe et que ce dernier était considéré comme satisfaisant.

Ils demandent que l’on améliore la qualité du résumé sur le nombre et le type d'audits internes réalisés ainsi que les recommandations formulées et les suites données à ces recommandations.

Parallèlement, les députés constatent qu'en 2010, la Cour des comptes disposait de crédits d'engagement d'un montant total de 148,6 millions EUR (188 millions EUR en 2009), et que le taux d'exécution de ces crédits a été de 93% (92,1% en 2009). Ils soulignent que le budget de la Cour des comptes est purement administratif (80% pour les personnes liées à l'institution et 20% pour les immeubles, etc.). Ils se disent globalement satisfaits que la Cour des comptes, après réorganisation, ait réduit le coût annuel des services de sécurité de 500.000 EUR tout en bénéficiant d'un service plus efficace et d'un meilleur contrôle des risques.

Les députés demandent à l'Office de lutte anti-fraude (OLAF) d'accélérer l'enquête relative aux allégations d'irrégularités qui lui ont été signalées.

Sur les activités de la Cour des comptes, les députés s’expriment comme suit :

• ils suggèrent à la Cour d'évaluer, dans un délai raisonnable, les effets et la mise en œuvre des conclusions figurant dans les rapports spéciaux et d'informer la commission du contrôle budgétaire des résultats de cette évaluation ;
• ils estiment que la prévention et l'identification des conflits d'intérêts sont plus qu'essentielles à la bonne utilisation des ressources et à la confiance dont témoigne la population à l'égard des institutions de l'Union. C’est la raison pour laquelle, ils attendent de la Cour des comptes que le rapport spécial sur la gestion des conflits d'intérêts à l'Agence européenne de la sécurité aérienne, à l'Agence européenne des produits chimiques, à l'Agence européenne de sécurité des aliments et à l'Agence européenne des médicaments, soit rapidement fourni au Parlement européen ;
• ils invitent la Cour des comptes à remettre à l'autorité de décharge un rapport spécial sur l'efficacité de la création d'entreprises communes et sur leur plus-value en ce qui concerne la bonne exécution des programmes de recherche, de développement technologique et de démonstration de l'Union.

Les députés estiment par ailleurs qu'une meilleure optimisation des activités de la Cour des comptes devrait passer par la spécialisation et la réalisation exclusive de contrôles par un plus grand nombre de fonctionnaires de la Cour des comptes. Ils espèrent voir une augmentation de la proportion de fonctionnaires affectés à ces tâches à l'avenir. Ils demandent en outre à la Cour d'inscrire dans ses futurs programmes de travail la réalisation, au terme d'un délai suffisant, du suivi systématique des contrôles spécifiques antérieurs afin d'évaluer les progrès réalisés.

Les députés encouragent la Cour des comptes à procéder, avant la fin de 2012, à une analyse approfondie des systèmes de surveillance et de contrôle au Conseil et attendent avec intérêt l'analyse de suivi par les pairs que la Cour des comptes entend lancer en 2012. Ils confirment leur intention d'élaborer un rapport d'initiative sur les améliorations qui pourraient être proposées à la Cour des comptes. Enfin, ils confirment leur intention de proposer la révision des règles pour la nomination des candidats à la Cour des comptes, de façon à améliorer les conditions exigées pour une meilleure adaptation de la Cour aux défis présents et futurs.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section V – European Court of Auditors (ECA)).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Court of Auditors.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the audit of the Court of Auditors, the report notes that the external auditor’s report states that, in the auditors' opinion, ‘the financial statements give a true and fair view of the financial position of the European Court of Auditors as of December 31, 2010, and of its cash flows for the year then ended in accordance with the Financial Regulation and the Accounting Rules of the European Union’. The report will be published in the Official Journal.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VIII - European Ombudsman).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Ombudsman.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole. However, in the specific case of the audit of the Ombudsman, the Court of Auditors made ​​no specific observation.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VI – European Social and Economic Committee).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Social and Economic Committee.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the particular case of the European Social and Economic Committee, the Court notes the following issues:

• reimbursement of travel expenses to Members of the Committee: the rules on the reimbursement of travel costs allow Members of the Committee to choose between Option A, based on actual travel costs incurred on production of the supporting documents, and Option B (60 % of missions performed between January and November 2010), which is the payment of a flat-rate allowance based on the distance in kilometres. Under Option B, the meeting must be held in Brussels and the compensation cannot exceed the standard price of a first-class train or airline ticket determined under Option A. The payment of a flat-rate allowance, under Option B, is generally higher than the actual price of the economy-class train or airline ticket used by beneficiaries most of the time. Reimbursement under Option B can thus generate a payment higher than the actual travel costs incurred. Although legal and regular, this procedure does not correspond to the practice of the other European Institutions and bodies, which is to reimburse travel costs on the basis of actual costs incurred;
• procurement: in one restricted procedure out of the seven procedures examined, the tenderers which had submitted offers in two different lots were not treated equally when submitting clarifications about their offer. In two negotiated procedures, errors and inconsistencies were noted for the drafting of the tender specifications and of the award criteria, the contacts with the tenderers, the evaluation of offers and the formalities for the outcome of the procedure.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section II – European Council and Council).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Council and the Council.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution (European Council/Council) repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the audit of the Council and the European Council, the Council notes the following:

• Financing of the ‘Residence Palace’ building project: the convention for the construction of the Residence Palace Building in Brussels, signed with the Belgian State in 2008 for planned completion in 2013 and for a total estimated cost of 310 million euro (estimated prices 2013), provides for the possibility of making advance payments. In the period 2008-2010, the Council made advance payments totalling 235 million euro, of which 30 million euro were included in the budget line for the acquisition of buildings in the Council’s initial budget. The additional funds of 205 million euro (i.e. 87 % of the total funds paid in advance) came from budgetary transfers made at the end of each year from 2007 to 2010 (mostly from budget lines for interpretation costs and delegations’ travel expenses).
• The repeated under-utilisation of these budget lines throughout the 2008-2010 period and the size of the amounts transferred with respect to total advance payments made does not comply with the principle of budget accuracy. In addition, the payment in the first 3 years of EUR 235 million out of the convention’s total value of EUR 310 million did not match payments to the progress of the building work.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VII – Committee of the Regions).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the Committee of the Regions.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the particular case of the Committee of the Regions, the Court notes the following issues:

• employment of permanent staff: the vacancy notice for the recruitment of one official stipulated as an eligibility criterion that candidates external to the Committee be officials or be on an European Personnel Selection Office (EPSO) successful candidates’ reserve list for a competition of the appropriate grade for the recruitment of officials. The selected candidate was recruited on the basis of an inter-institutional transfer. At that point, he had not formally been appointed as a probationary official in his Institution of origin and his personal file did not include evidence that this transfer was formally endorsed at the appropriate hierarchical level in the Institution of origin.
• procurement: the audit found that, in two negotiated procedures out of four concluded under the provisions of Article 129 of the Implementing Rules, which allows the use of the negotiated procedure for contracts with a value less than or equal to EUR 60 000, the authorising officers did not draw up a formal estimate of the contract value in order to justify the use of the negotiated procedure.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VI – European Social and Economic Committee).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Social and Economic Committee.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the particular case of the European Social and Economic Committee, the Court notes the following issues:

• reimbursement of travel expenses to Members of the Committee: the rules on the reimbursement of travel costs allow Members of the Committee to choose between Option A, based on actual travel costs incurred on production of the supporting documents, and Option B (60 % of missions performed between January and November 2010), which is the payment of a flat-rate allowance based on the distance in kilometres. Under Option B, the meeting must be held in Brussels and the compensation cannot exceed the standard price of a first-class train or airline ticket determined under Option A. The payment of a flat-rate allowance, under Option B, is generally higher than the actual price of the economy-class train or airline ticket used by beneficiaries most of the time. Reimbursement under Option B can thus generate a payment higher than the actual travel costs incurred. Although legal and regular, this procedure does not correspond to the practice of the other European Institutions and bodies, which is to reimburse travel costs on the basis of actual costs incurred;
• procurement: in one restricted procedure out of the seven procedures examined, the tenderers which had submitted offers in two different lots were not treated equally when submitting clarifications about their offer. In two negotiated procedures, errors and inconsistencies were noted for the drafting of the tender specifications and of the award criteria, the contacts with the tenderers, the evaluation of offers and the formalities for the outcome of the procedure.

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VIII - European Ombudsman).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Ombudsman.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole. However, in the specific case of the audit of the Ombudsman, the Court of Auditors made ​​no specific observation.

PURPOSE: presentation of the Court of Auditors’ report on the implementation of the budget concerning the financial year 2010 (Section IX - European Data Protection Supervisor).

CONTENT: the Court of Auditors presents its 34th annual report on the implementation of the budget concerning the financial year 2010.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court presents to the European Parliament and to the Council in the framework of the discharge procedure, the statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions underlying those accounts for each institution and organ of the EU, on the basis of an external audit.

This audit included the financial implementation of the European Data Protection Supervisor (EDPS).

Based on its audit work, the Court concludes that the payments as a whole for administrative and other expenditure were free from material error. The most likely rate of error is 0.4 %.

The Court again concludes that the supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the Court noted a certain number of errors and weaknesses in the implementation of public procurement procedures by the institutions and bodies of the EU. Decisions regarding recruitment were not always correctly recorded. These weaknesses are not significant for all policy groups taken together, but are significant in the context of each institution or body and must be taken into consideration by administrators.

Accordingly, the Court recommends to the institutions and bodies of the EU:

• to ensure that appropriate documentation is established to justify the recruitment decisions made and that eligibility criteria set out in vacancy notices are respected;
• to ensure that authorising officers have appropriate checks and better guidance at their disposal so as to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the EDPS, the Court particularly notes the following points:

• organisation of internal competition : an internal competition in four different fields (legal field with experience in data protection, technological field with experience in data protection, human resources and secretarial assistance) was organised by the European Data Protection Supervisor (EDPS)’s Office in 2009. While the specialised nature of the functions performed by the EDPS’s Office may justify the organisation of an internal competition, this policy should not be considered as the norm. Best practice is to use the services of the European Personnel Selection Office (EPSO), which organises open competitions on a regular basis;
• follow-up on observations in the court of Auditors 2009 annual report: with regard to payment of social allowances to staff members : the 2009 report asked the EDPS to ensure that Staff are requested to deliver at appropriate intervals documents proving their personal situation. In this respect, the European Data Protection Supervisor should improve its system for the timely monitoring and control of these documents. The EDPS has corrected the errors noted in the 2009 DAS and in 2010 and 2011 has implemented tools for better management of the allowances (formal contacts within the EDPS and with the PMO and yearly information fiche).

PURPOSE: presentation of the report of the Court of Auditors on the implementation of the 2010 EU Budget (Section I – European Parliament.

CONTENT: the European Court of Auditors (ECA) published its 34^th annual report on the implementation of the 2010 EU General Budget.

In accordance with the tasks and objectives assigned to it by the Treaty on the Functioning of the EU (TFEU), in the context of the discharge procedure, the Court of Auditors provides, both for the European Parliament and the Council, a statement of assurance (“DAS”) on the reliability of the accounts, as well as the legality and regularity of transactions of each EU institution, body or agency, on the basis of an independent external audit.

This audit also dealt with the European Parliament’s financial implementation.

On the basis of these audits, the Court considers that the payments in the policy group “Administrative and other expenditure” were free from material error. The estimated rate of error is 0.4%.

The ECA found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

The ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court also makes a number of observations in regard to each EU institution or body and do not call into question the overall positive assessments given that they do not have a significant effect on the overall administrative expenditures undertaken.

In the specific case of the audit of the European Parliament, the ECA notes the following points:

• visitors’ groups: the Rules governing the reception of groups of visitors, adopted on 16 December 2002, provide that groups of visitors can be granted subsidies for compensation for travel expenses. The amount is calculated on the basis of the number of visitors and the average return distance the group has to travel, valued at the standard cost of an individual trip by private car. It should not exceed the actual cost of travel. The procedures in place do not require groups to provide evidence of the actual travel costs incurred, resulting in a risk of overpayment as most groups use cheaper collective transport rather than individual means of transport;
• employment of contract agents: an examination of the procedures for recruiting contract staff established that, in four out of the five cases audited, documents evidencing the examination of applications, the performance of interviews and the decision made to select those staff were not on file. Best practice is to ensure that there is full documentation for internal control purposes;
• procurement: in five procurement procedures out of 20, the audit found errors and inconsistencies in the definition and application of award criteria and in the analysis of tender documentation. These cases also evidenced weaknesses in: the drafting of contractual conditions; the authorising officers’ and the evaluation committees’ performance of their respective roles; and the formal communication to the tenderers of the outcome of the procedure ;
• organisation and functioning of political groups: the Parliament’s Internal Rules for the implementation of the budget managed by political groups, adopted by the Bureau on 30 June 2003, provide that the years in which European elections are held (as was the case in 2009) include two distinct budgetary and financial periods. Article 2.1.6 of these Internal Rules states that any unused appropriations exceeding 50 % of those received from the Parliament’s budget for each period shall be paid back to the Parliament. This rule has not been applied and 2 355 955 euro should have been deducted from the appropriations paid to the political groups by the Parliament in 2010 ;
• performance of the ex-ante verification: Article 47 of the Implementing Rules of the Financial Regulation provides that every act implementing the budget must be subject to an ex-ante verification. In the case of payments made to groups of visitors, procurement procedures and payments made under the Parliament’s Internal Rules for the implementation of the budget managed by political groups, the programme for performing ex-ante checks does not include checks tailored to the nature and risk profile of the operations examined. In the case of recruitment procedures, specific checks are applied but do not cover the selection phase. The effectiveness of the ex-ante verification is thus limited.

Follow-up on the observations in the ECA’s 2009 annual report: in regard to the payment of social allowances to staff members, the Court indicated that staff should be requested to deliver at appropriate intervals documents confirming their personal situation. In addition, the Parliament should implement a system for the timely monitoring and control of these documents. Parliament indicated in response that it had implemented measures to mitigate the risk: launching of a campaign to check eligibility for some allowances, which led to the recovery of more than 70 000 euro;

• implementation of an automated control tool (‘electronic fiche’) allowing an annual verification of the staff's personal and administrative data; and
• performance of checks on the establishment of individual entitlements during recruitment procedures or when staff change category.

PURPOSE: presentation of the Court of Auditors’ report on the implementation of the budget concerning the financial year 2010 (Section IX - European Data Protection Supervisor).

CONTENT: the Court of Auditors presents its 34th annual report on the implementation of the budget concerning the financial year 2010.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court presents to the European Parliament and to the Council in the framework of the discharge procedure, the statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions underlying those accounts for each institution and organ of the EU, on the basis of an external audit.

This audit included the financial implementation of the European Data Protection Supervisor (EDPS).

Based on its audit work, the Court concludes that the payments as a whole for administrative and other expenditure were free from material error. The most likely rate of error is 0.4 %.

The Court again concludes that the supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the Court noted a certain number of errors and weaknesses in the implementation of public procurement procedures by the institutions and bodies of the EU. Decisions regarding recruitment were not always correctly recorded. These weaknesses are not significant for all policy groups taken together, but are significant in the context of each institution or body and must be taken into consideration by administrators.

Accordingly, the Court recommends to the institutions and bodies of the EU:

• to ensure that appropriate documentation is established to justify the recruitment decisions made and that eligibility criteria set out in vacancy notices are respected;
• to ensure that authorising officers have appropriate checks and better guidance at their disposal so as to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the EDPS, the Court particularly notes the following points:

• organisation of internal competition : an internal competition in four different fields (legal field with experience in data protection, technological field with experience in data protection, human resources and secretarial assistance) was organised by the European Data Protection Supervisor (EDPS)’s Office in 2009. While the specialised nature of the functions performed by the EDPS’s Office may justify the organisation of an internal competition, this policy should not be considered as the norm. Best practice is to use the services of the European Personnel Selection Office (EPSO), which organises open competitions on a regular basis;
• follow-up on observations in the court of Auditors 2009 annual report: with regard to payment of social allowances to staff members : the 2009 report asked the EDPS to ensure that Staff are requested to deliver at appropriate intervals documents proving their personal situation. In this respect, the European Data Protection Supervisor should improve its system for the timely monitoring and control of these documents. The EDPS has corrected the errors noted in the 2009 DAS and in 2010 and 2011 has implemented tools for better management of the allowances (formal contacts within the EDPS and with the PMO and yearly information fiche).

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section II – European Council and Council).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Council and the Council.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution (European Council/Council) repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the audit of the Council and the European Council, the Council notes the following:

• Financing of the ‘Residence Palace’ building project: the convention for the construction of the Residence Palace Building in Brussels, signed with the Belgian State in 2008 for planned completion in 2013 and for a total estimated cost of 310 million euro (estimated prices 2013), provides for the possibility of making advance payments. In the period 2008-2010, the Council made advance payments totalling 235 million euro, of which 30 million euro were included in the budget line for the acquisition of buildings in the Council’s initial budget. The additional funds of 205 million euro (i.e. 87 % of the total funds paid in advance) came from budgetary transfers made at the end of each year from 2007 to 2010 (mostly from budget lines for interpretation costs and delegations’ travel expenses).
• The repeated under-utilisation of these budget lines throughout the 2008-2010 period and the size of the amounts transferred with respect to total advance payments made does not comply with the principle of budget accuracy. In addition, the payment in the first 3 years of EUR 235 million out of the convention’s total value of EUR 310 million did not match payments to the progress of the building work.

PURPOSE: presentation of the report of the Court of Auditors on the implementation of the 2010 EU Budget (Section I – European Parliament.

CONTENT: the European Court of Auditors (ECA) published its 34^th annual report on the implementation of the 2010 EU General Budget.

In accordance with the tasks and objectives assigned to it by the Treaty on the Functioning of the EU (TFEU), in the context of the discharge procedure, the Court of Auditors provides, both for the European Parliament and the Council, a statement of assurance (“DAS”) on the reliability of the accounts, as well as the legality and regularity of transactions of each EU institution, body or agency, on the basis of an independent external audit.

This audit also dealt with the European Parliament’s financial implementation.

On the basis of these audits, the Court considers that the payments in the policy group “Administrative and other expenditure” were free from material error. The estimated rate of error is 0.4%.

The ECA found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

The ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court also makes a number of observations in regard to each EU institution or body and do not call into question the overall positive assessments given that they do not have a significant effect on the overall administrative expenditures undertaken.

In the specific case of the audit of the European Parliament, the ECA notes the following points:

• visitors’ groups: the Rules governing the reception of groups of visitors, adopted on 16 December 2002, provide that groups of visitors can be granted subsidies for compensation for travel expenses. The amount is calculated on the basis of the number of visitors and the average return distance the group has to travel, valued at the standard cost of an individual trip by private car. It should not exceed the actual cost of travel. The procedures in place do not require groups to provide evidence of the actual travel costs incurred, resulting in a risk of overpayment as most groups use cheaper collective transport rather than individual means of transport;
• employment of contract agents: an examination of the procedures for recruiting contract staff established that, in four out of the five cases audited, documents evidencing the examination of applications, the performance of interviews and the decision made to select those staff were not on file. Best practice is to ensure that there is full documentation for internal control purposes;
• procurement: in five procurement procedures out of 20, the audit found errors and inconsistencies in the definition and application of award criteria and in the analysis of tender documentation. These cases also evidenced weaknesses in: the drafting of contractual conditions; the authorising officers’ and the evaluation committees’ performance of their respective roles; and the formal communication to the tenderers of the outcome of the procedure ;
• organisation and functioning of political groups: the Parliament’s Internal Rules for the implementation of the budget managed by political groups, adopted by the Bureau on 30 June 2003, provide that the years in which European elections are held (as was the case in 2009) include two distinct budgetary and financial periods. Article 2.1.6 of these Internal Rules states that any unused appropriations exceeding 50 % of those received from the Parliament’s budget for each period shall be paid back to the Parliament. This rule has not been applied and 2 355 955 euro should have been deducted from the appropriations paid to the political groups by the Parliament in 2010 ;
• performance of the ex-ante verification: Article 47 of the Implementing Rules of the Financial Regulation provides that every act implementing the budget must be subject to an ex-ante verification. In the case of payments made to groups of visitors, procurement procedures and payments made under the Parliament’s Internal Rules for the implementation of the budget managed by political groups, the programme for performing ex-ante checks does not include checks tailored to the nature and risk profile of the operations examined. In the case of recruitment procedures, specific checks are applied but do not cover the selection phase. The effectiveness of the ex-ante verification is thus limited.

Follow-up on the observations in the ECA’s 2009 annual report: in regard to the payment of social allowances to staff members, the Court indicated that staff should be requested to deliver at appropriate intervals documents confirming their personal situation. In addition, the Parliament should implement a system for the timely monitoring and control of these documents. Parliament indicated in response that it had implemented measures to mitigate the risk: launching of a campaign to check eligibility for some allowances, which led to the recovery of more than 70 000 euro;

• implementation of an automated control tool (‘electronic fiche’) allowing an annual verification of the staff's personal and administrative data; and
• performance of checks on the establishment of individual entitlements during recruitment procedures or when staff change category.

PURPOSE: presentation of the Court of Auditors’ report on the implementation of the budget concerning the financial year 2010 (Section IX - European Data Protection Supervisor).

CONTENT: the Court of Auditors presents its 34th annual report on the implementation of the budget concerning the financial year 2010.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court presents to the European Parliament and to the Council in the framework of the discharge procedure, the statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions underlying those accounts for each institution and organ of the EU, on the basis of an external audit.

This audit included the financial implementation of the European Data Protection Supervisor (EDPS).

Based on its audit work, the Court concludes that the payments as a whole for administrative and other expenditure were free from material error. The most likely rate of error is 0.4 %.

The Court again concludes that the supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the Court noted a certain number of errors and weaknesses in the implementation of public procurement procedures by the institutions and bodies of the EU. Decisions regarding recruitment were not always correctly recorded. These weaknesses are not significant for all policy groups taken together, but are significant in the context of each institution or body and must be taken into consideration by administrators.

Accordingly, the Court recommends to the institutions and bodies of the EU:

• to ensure that appropriate documentation is established to justify the recruitment decisions made and that eligibility criteria set out in vacancy notices are respected;
• to ensure that authorising officers have appropriate checks and better guidance at their disposal so as to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the specific case of the EDPS, the Court particularly notes the following points:

• organisation of internal competition : an internal competition in four different fields (legal field with experience in data protection, technological field with experience in data protection, human resources and secretarial assistance) was organised by the European Data Protection Supervisor (EDPS)’s Office in 2009. While the specialised nature of the functions performed by the EDPS’s Office may justify the organisation of an internal competition, this policy should not be considered as the norm. Best practice is to use the services of the European Personnel Selection Office (EPSO), which organises open competitions on a regular basis;
• follow-up on observations in the court of Auditors 2009 annual report: with regard to payment of social allowances to staff members : the 2009 report asked the EDPS to ensure that Staff are requested to deliver at appropriate intervals documents proving their personal situation. In this respect, the European Data Protection Supervisor should improve its system for the timely monitoring and control of these documents. The EDPS has corrected the errors noted in the 2009 DAS and in 2010 and 2011 has implemented tools for better management of the allowances (formal contacts within the EDPS and with the PMO and yearly information fiche).