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Document 52013TA1213(19)
Report on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2012, together with the Authority’s replies
Report on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2012, together with the Authority’s replies
Report on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2012, together with the Authority’s replies
OJ C 365, 13.12.2013, p. 134–141
(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 365/134 |
REPORT
on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2012, together with the Authority’s replies
2013/C 365/19
INTRODUCTION
1. |
The European Insurance and Occupational Pensions Authority (hereinafter ‘the Authority’, aka ‘EIOPA’), which is located in Frankfurt, was established by Regulation (EU) No 1094/2010 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 the protection of policyholders, pension scheme members and beneficiaries (2). The Authority was set up on 1 January 2011. |
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. |
EIOPA has improved its procurement procedures in order to become fully compliant with EU procurement rules. However, one contract related to the design of a financial database was subdivided into four lots of 60 000 euro each, which were all directly awarded to two companies. Given the total value of the services to be procured for the same project (240 000 euro), an open or restricted procedure should have been applied and the related commitments and payments are thus irregular. |
COMMENTS ON INTERNAL CONTROLS
12. |
A physical verification of assets was carried out in May and June 2012, but no physical verification report was produced. The Authority has not adopted any procedures or guidelines on physical checks on tangible assets. |
COMMENTS ON BUDGETARY MANAGEMENT
13. |
The carry-over of committed appropriations to 2013 was very high for title III (operational expenditure) at 79 % of total appropriations. This mainly results from the complexity and lengthy duration of one IT procurement procedure for which the contract of 2,2 million euro was signed as planned in December 2012. |
FOLLOW-UP OF PREVIOUS YEAR'S COMMENTS
14. |
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 10 September 2013.
For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President
(1) OJ L 331, 15.12.2010, p. 48.
(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).
ANNEX I
Follow-up of previous year’s comments
Year |
Court’s comment |
Status of corrective action (Completed / Ongoing / Outstanding / N/A) |
2011 |
The commitment rates were low especially for title II ‘Administrative expenditure’ (60 %) and title III ‘Operational expenditure’ (12 %). This impacted on the Authority’s IT objectives, which were not entirely achieved. |
Completed |
2011 |
The Authority’s budget for the financial year 2011 amounted to 10,7 million euro. In accordance with Article 62(1) of its Founding Regulation, 55 % of the 2011 budget was financed from Member States’ and EFTA countries’ contributions and 45 % from the Union budget. At the end of 2011 the Authority recorded a positive budget outturn of 2,8 million euro. In compliance with its Financial Regulation the full amount was then recorded in the accounts as a liability towards the European Commission. |
Ongoing |
2011 |
The Authority’s accounting system has yet to be validated by the Accounting Officer, as required by the Financial Regulation. |
Completed |
2011 |
The audited procurement procedures were not fully consistent with the provisions of the general Financial Regulation. For five purchases of IT equipment (total amount of 160 117 euro) the award criteria applied were not set in advance and no written contracts were signed. In another case related to recruitment services (55 000 euro), the award criteria were incorrectly applied. The Authority should ensure that all new contracts are awarded in full compliance with the EU procurement rules. |
Ongoing |
2011 |
The Authority needs to improve the transparency of recruitment procedures: threshold scores for admission to written tests and interviews or for inclusion in the list of suitable candidates, and questions for oral and written tests, were not set before the examination of applications, and there was no decision of the Appointing Authority to appoint the selection boards. |
Ongoing |
ANNEX II
European Insurance and Occupational Pensions Authority (Frankfurt am Main)
Competences and activities
Areas of Union competence deriving from the Treaty (Articles 26, 114, 290, 291 of the Treaty on the Functioning of the European Union) |
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Competences of the Authority (Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing the Authority, Articles 1(6) and Article 8 on tasks and powers) |
Objectives Protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses. Tasks
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Governance (Regulation (EU) No 1094/2010 establishing the Authority: Articles 40-44: Board of Supervisors; Articles 45-47: Management Board; Articles 48-50: Chair; Articles 51-53: Executive Director) |
Board of Supervisors (BoS) Composition Chairperson (non-voting), the head of the national public authority competent for the supervision of financial institutions in each Member State (voting), one representative of the Commission, of the European Systemic Risk Board, the European Banking Authority, the European Securities Markets Authority (all non-voting); observers may be permitted. Tasks The Authority’s main decision-making body. Management Board (MB) Composition Chairperson of the Authority, six representatives of national supervisory authorities. The Executive Director and a representative of the European Commission shall participate in meetings of the MB without the right to vote. Tasks The MB shall ensure that the Authority carries out its mission and performs the tasks assigned to it in accordance with Regulation No 1094/2010. The MB shall exercise budgetary powers and adopt the staff policy plan and staff implementing measures. The Authority’s Chairperson Represents the Authority, prepares the work of the Board of Supervisors (BoS), chairs the BoS and MB meetings. The Authority’s Executive Director Is in charge of the management of the Authority and the implementation of the annual work programme and the budget; prepares the work of the Management Board, the budget, the work programme. Quality Control Committee Composition The Authority’s Alternate Chairperson, two Members of the Management Board, the Executive Director. Tasks To oversee and assess appropriate implementation of the internal procedures and decisions. External audit European Court of Auditors. Internal audit European Commission’s Internal Audit Service (IAS). Discharge authority European Parliament acting on a recommendation from the Council. |
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Resources made available to the Authority in 2012 |
Final Budget Final Budget Appropriations: 15 655 000 euro Establishment Plan Statutory staff: 69 posts authorised in the establishment plan, of which occupied: 69 Establishment plan 100 % fulfilled Contract staff posts: 12 planned in the budget, 14 occupied Seconded National Experts posts: eight planned in the budget, of which occupied: eight Total: 91 staff |
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Products and services in 2012 |
Regulatory tasks
Supervisory tasks
Consumer protection and financial innovation
Common supervisory culture
Financial stability
Crisis management
External relations
Conferences / other public events 2012
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Source: Information supplied by the Authority. |
THE AUTHORITY’S REPLIES
11. |
EIOPA acknowledges and shares the concerns raised by the Court. However, there is sound business rationale backing both the decision to run a procurement, and to do it in 4 separate lots, in order to deepen our knowledge on how to design our system, reducing the risk of acquiring the wrong services and products and ensuring sufficient competition in the core stage of the process, namely the main procurement. EIOPA’s strong intention to be compliant and improve its processes is underlined by the following facts: Evaluation committees were set up for each procedure even when they would not have been necessary; EIOPA’s aim was to find different contractors for different domains to prepare for upcoming open procedures, which is documented by that fact that for each of the procedures, more than the necessary number of companies were invited to tender. The duplication of contractors was due to the limited number of offers received. EIOPA wanted to have effective competition and in order to avoid a single provider coming with a ‘tailored’ solution that would de facto in the main procurement lead to the same company being the only suitable runner it decided to run 4 separate lots. |
12. |
EIOPA took note of the Court’s finding. In 2012, the priority laid on the safeguarding of the authority’s assets itself instead of the implementation of the underlying procedures and the documentation of the verification process. EIOPA meanwhile has taken corrective action. A training took place for new financial actors, in view to streamline the asset processes. EIOPA has also adopted guidelines documenting the asset processes. The implementation of these processes is ongoing. |
13. |
EIOPA took note of the Court’s finding. In case of the IT related carry-overs, this can be attributed to the start up stage of the Authority, after having first adopted the IT strategy end 2011 and the IT strategy implementation plan early 2012. Once the start up phase will be completed, the IT spending will be more evenly spread throughout the fiscal year which will significantly reduce a risk of carry-overs. |