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Document 52013TA1213(12)
Report on the annual accounts of the European Banking Authority for the financial year 2012, together with the Authority’s replies
Report on the annual accounts of the European Banking Authority for the financial year 2012, together with the Authority’s replies
Report on the annual accounts of the European Banking Authority for the financial year 2012, together with the Authority’s replies
OJ C 365, 13.12.2013, p. 80–88
(BG, ES, CS, DA, DE, ET, EL, EN, FR, HR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)
13.12.2013 |
EN |
Official Journal of the European Union |
C 365/80 |
REPORT
on the annual accounts of the European Banking Authority for the financial year 2012, together with the Authority’s replies
2013/C 365/12
INTRODUCTION
1. |
The European Banking Authority (hereinafter ‘the Authority’, aka ‘EBA’), which is located in London, was established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (1). The Authority’s task is to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, to monitor and assess market developments in the area of its competence and to foster depositor and investor protection (2). |
INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE
2. |
The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s 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
3. |
Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:
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The management’s responsibility
4. |
In accordance with Articles 33 and 43 of Commission Regulation (EC, Euratom) No 2343/2002 (5), the management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions:
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The auditor’s responsibility
5. |
The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) 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 Authority are free from material misstatement and the transactions underlying them are legal and regular. |
6. |
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. |
7. |
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
8. |
In the Court’s opinion, the Authority’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 Regulation and the accounting rules adopted by the Commission’s accounting officer. |
Opinion on the legality and regularity of the transactions underlying the accounts
9. |
In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2012 are legal and regular in all material respects. |
10. |
The comments which follow do not call the Court’s opinions into question. |
COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS
11. |
In order to cover higher school fees, the Authority grants staff whose children attend primary or secondary school an education contribution in addition to the education allowances provided for in the Staff Regulations (8). Total 2012 education contributions amounted to some 76 000 euro. They are not covered by the Staff Regulations and therefore irregular. |
COMMENTS ON INTERNAL CONTROLS
12. |
In accordance with the Authority’s IT strategy which was drawn up by its predecessor organisation (9), the EBA’s IT core application systems were outsourced to an external IT provider (10) until December 2013. This poses risks related to the Authority’s limited control and supervision over its IT systems. |
COMMENTS ON BUDGETARY MANAGEMENT
13. |
The overall level of appropriations committed was 89 %, varying between 84 % for title I (staff expenditure), 86 % for title II (administrative expenditure) and 100 % for title III (operational expenditure) (11). Carry-overs of committed appropriations were high for title II (45 %) mainly for reasons beyond the Authority’s control, such as the unsuccessful attempt to find new premises and delays in the implementation of some IT projects for which it was difficult to obtain information needed from the predecessor organisation. For title III, carry-overs of committed appropriations were high (85 %), mainly due to the complexity and lengthy duration of two IT procurement procedures which however were carried out according to plan, delays in the launching and implementation of three other IT projects and the late invoicing for certain IT services by the suppliers. |
OTHER COMMENTS
14. |
The Court identified the following weaknesses in the audited recruitment procedures affecting transparency and equal treatment: candidates were given a global score instead of one score for each of the selection criteria; there was no evidence that the questions for interviews and tests had been set before the date of the examinations. |
FOLLOW-UP OF PREVIOUS YEAR'S COMMENTS
15. |
An overview of the corrective actions taken in response to the Court's previous year's comments is provided in Annex I. |
This Report was adopted by Chamber IV, headed by Dr Louis GALEA, Member of the Court of Auditors, in Luxembourg at its meeting of 15 July 2013.
For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President
(1) OJ L 331, 15.12.2010, p. 12.
(2) Annex II summarises the Authority’s competences and activities. It is presented for information purposes.
(3) These include the balance sheet and the economic outturn account, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.
(4) These comprise the budgetary outturn account and the annex to the budgetary outturn account.
(5) OJ L 357, 31.12.2002, p. 72.
(6) The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.
(7) Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (OJ L 248, 16.9.2002, p. 1).
(8) Article 3 of Annex VII provides for twice the basic allowance of 252,81 euro = 505,62 euro.
(9) Committee of European Banking Supervisors.
(10) Banque de France.
(11) Following an analysis of needs for the remaining part of the year, the budget was revised and appropriations were reduced by 8,9 % in September 2012.
ANNEX I
Follow-up of previous year’s comments
Year |
Court’s comment |
Status of corrective action (Completed / Ongoing / Outstanding / N/A) |
2011 |
The low budget execution rates show difficulties in budget planning and implementation. |
Ongoing |
2011 |
The Authority’s budget for the financial year 2011 was 12,7 million euro. In accordance with its Founding Regulation (1), 60 % of the 2011 budget was financed from Member States’ and EFTA countries’ contributions and 40 % from the Union budget. At the end of 2011, the Authority recorded a positive budget outturn of 3,6 million euro. In compliance with Articles 15(4) and 16(1) of its Financial Regulation the full amount was then recorded in the accounts as a liability towards the European Commission. |
Ongoing |
2011 |
Weaknesses were noted as regards three legal commitments made in advance of budget commitments (742 000 euro). |
Completed |
2011 |
The Authority’s accounting system has still to be validated by the Accounting Officer, as required by the Financial Regulation. |
Completed |
2011 |
Not all the audited procurement procedures were fully consistent with the provisions of the general Financial Regulation. Contracts worth 299 182 euro had been launched under national rules, leading to payments in 2011 of 248 775 euro. The Authority should ensure that all new contracts are awarded in full compliance with the EU procurement rules. |
Completed |
2011 |
The Authority needs to improve the transparency of recruitment procedures: weightings for selection criteria and threshold scores for being invited to interviews or for inclusion in the list of suitable candidates were not set before the examination of applications. |
Ongoing |
(1) OJ L 331, 15.12.2010, p. 12, Article 62(1).
ANNEX II
European Banking Authority (London)
Competences and activities
Areas of Union competence deriving from the Treaty (Articles 26 and 114 of the Treaty on the Functioning of the European Union) |
Article 26 ‘1. The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties. 2. The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties. 3. The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.’ Article 114 ‘1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.’ |
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Competences of the Authority (Regulation (EU) No 1093/2010 of the European Parliament and of the Council) |
Objectives
Tasks
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Governance |
Board of Supervisors Composed of the Chairperson, one representative per Member State (head of NSA (2)), Commission, ECB (3), ESRB, EIOPA (4) and ESMA (5). Management Board Composed of the Chairperson and six other members of the Board of Supervisors. Chairperson Appointed by Board of Supervisors. Executive Director Appointed by Board of Supervisors. Board of Appeal Joint body of the three ESAs. External audit European Court of Auditors. Discharge authority European Parliament. |
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Resources made available to the Authority in 2012 (2011) |
2012 Budget 20,7 (12,7) million euro Including:
Staff as at 31 December 2012 68 temporary staff (40) 12 contract staff (6) 14 Seconded National Experts (5) |
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Products and services in 2012 |
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Source: Information supplied by the Authority. |
(1) European Systemic Risk Board.
(2) National Supervisory Authority.
(3) European Central Bank.
(4) European Insurance and Occupational Pensions Authority.
(5) European Securities and Markets Authority.
Source: Information supplied by the Authority.
THE AUTHORITY’S REPLIES
11. |
The high level of schooling fees and the absence of a European School in London is a major obstacle to attract and retain highly qualified staff with sufficient experience to fulfil the EBA’s mandate. Following unsuccessful negotiations with the UK authorities, the EBA has adopted an internal policy in order to avoid discrimination and promote equal opportunities in the framework of the staff policy, thus reflecting the spirit of the Staff Regulations. Agency staff at the EBA ought to receive the same social support for educational costs as staff employed under the Staff Regulations in other locations. The background and reasons for this approach have always been included in detail in the EBA’s Budget (Staff Policy Plan) in the annual budgetary procedure. |
12. |
The EBA agrees with the Court’s comment. The new IT strategy, approved by the Management Board in 2012 and implemented in 2013, will return to the Authority an extended control over its IT systems on 1 January 2014 when the contract with the current IT provider is ended. |
13. |
The EBA takes note of the European Court of Auditors’ finding. In case of IT related carry-overs in title III, this can be attributed to the start up stage of the agency and the implementation of a new IT strategy which is aiming to phase out legacy solutions and establish a robust IT platform in line with the long term mandate of the EBA. Once the start up phase is completed, the IT spending will be more evenly spread throughout the fiscal year, which will significantly reduce a risk of carry-overs. |
14. |
The EBA acknowledges the weaknesses identified by the Court and has promptly implemented the corrective measures. Since January 2013, candidates are given a score for each of the selection criteria and evidence that the questions and tests have been set before the date of the examinations is systematically included in the recruitment files. |