16.12.2011   

EN

Official Journal of the European Union

C 368/17

1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Innovative Medicines (IMI Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

2.

The objective of the IMI Joint Undertaking is to significantly improve the efficiency and effectiveness of the drug development process, with the long-term aim that the pharmaceutical sector produces more effective and safer innovative medicines (2).

3.

The Founding Members of the Joint Undertaking are the European Union, represented by the European Commission, and the European Federation of Pharmaceutical Industries and Associations (EFPIA). Any legal entity directly or indirectly supporting research and development in a Member State or in a country associated with the Seventh Framework Programme (3) may apply to become a Member of the IMI Joint Undertaking.

4.

The maximum EU contribution to the IMI Joint Undertaking to cover running costs and research activities is 1 billion euro, to be paid from the budget of the Seventh Framework Programme. The EU and EFPIA, as Founding Members, are to contribute equally to the running costs, each with an amount not exceeding 4 % of the total EU contribution. Other Members are to contribute to running costs in proportion to their contribution to research activities. The research companies which are members of EFPIA are to contribute to the funding of research activities through in-kind (4) contributions at least equal to the EU financial contribution (5).

5.

The Joint Undertaking started to work autonomously on 16 November 2009.

6.

Pursuant to the provisions of Article 287(1) of the Treaty on the Functioning of the European Union the Court has audited the annual accounts (6) of the Innovative Medicines Initiative Joint Undertaking, which comprise the ‘financial statements’ (7) and the ‘reports on the implementation of the budget’ (8) for the financial year ended 31 December 2010 and the legality and regularity of the transactions underlying those accounts.

7.

This Statement of Assurance is addressed to the European Parliament and to the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (9).

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's financial rules, under his own responsibility and within the limits of the authorised appropriations (10). The Director is responsible for putting in place (11) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (12) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

9.

The Court's responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Joint Undertaking and the legality and regularity of the transactions underlying them.

10.

The Court conducted its audit in accordance with the IFAC and ISSAI (13) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

11.

The Court's audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and the regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity's preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court's audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

12.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

13.

In the Court's opinion, the annual accounts of the Joint Undertaking fairly present, in all material respects, its financial position as of 31 December 2010, the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

14.

In the Court's opinion, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

15.

The comments which follow in paragraphs 16-24 do not call the Court's opinions into question.

16.

The 2010 annual budget and implementation plan were not adopted by the Governing Board until 16 March 2010 (14). The late adoption was due to the Members of the Joint Undertaking taking a long time to establish and agree on the scientific priorities to be included in the annual implementation plan. This delayed the launch of the call for proposals. During the year, the Joint Undertaking launched the third call for proposals (15), finalised the negotiation process for the second call for proposals (16) and started to receive and pay cost claims from the beneficiaries participating in the projects funded under the first call for proposals (17).

17.

The final budget included commitment appropriations of 107 million euro and payment appropriations of 29 million euro. Additionally, 3 million euro in commitment appropriations and 78,6 million euro in payment appropriations were carried over from 2009. The utilisation rates for available commitment and payment appropriations were 6 % and 35 % respectively, 98,6 million euro in commitment appropriations were carried over to 2011 and 64 million euro of payment appropriations carried over from 2009 were cancelled at the end of the year. The low implementation of the budget is also reflected in the cash balance, which stood at 71 million euro at the end of the year (65 % of the available payment appropriations in 2010).

18.

The Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010. In particular, further work is needed in establishing and documenting the accounting procedures and controls relating to the closure of the accounts and the recognition and measurement of the operational expenditure. These are important elements of the Joint Undertaking's system of internal control.

19.

Furthermore, at the end of 2010 the underlying business processes had not yet been formalised and had not been validated by the Accounting Officer as required by the Joint Undertaking's financial rules.

20.

The limited review of the IT controls showed that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission, but the formalisation of policies and procedures, however, is lagging behind in certain areas (18).

21.

The ex-post audit strategy (19) of the Joint Undertaking was adopted by a Governing Board decision on 14 December 2010 and is a key control for assessing the legality and regularity of the underlying transactions. This strategy envisages that the audit population (20) will increase progressively as from 2011 when projects relating to several calls will be running in parallel and cost claims for these projects will be submitted.

22.

The methodology for evaluating contributions in-kind has not yet been approved by the Governing Board (21) as it proved difficult for an agreement to be reached. As a consequence, the EFPIA members were unable to report on the costs incurred during the first reporting period as established in the grant agreements.

23.

In its previous report, the Court pointed out the need to clarify the provision in the Statutes of the Joint Undertaking on the role of the Commission's internal auditor. Although the Joint Undertaking's financial rules have not yet been amended to include the provision referring to the powers of the Commission's internal auditor, the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission's Internal Audit Service and the Joint Undertaking's internal auditing function are clearly defined.

24.

As previously reported by the Court, according to the Council Regulation setting up the Joint Undertaking, a host agreement should be concluded between the Joint Undertaking and Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium. However, as at the end of 2010, no such agreement had been signed.