16.12.2011   

EN

Official Journal of the European Union

C 368/24

1.

The European Joint Undertaking for ITER (1) and the Development of Fusion Energy was set up in March 2007 (2) for a period of 35 years. While the main fusion facilities are to be developed at Cadarache in France, the Joint Undertaking is located in Barcelona.

2.

The tasks of the Joint Undertaking are (3):

3.

The members of the Joint Undertaking are Euratom, represented by the European Commission, the Member States of Euratom and other countries which have concluded cooperation agreements with Euratom in the field of controlled nuclear fusion and have expressed their wish to become Members (at 31 December 2010: Switzerland).

4.

When the Joint Undertaking was set up, the indicative total resources deemed necessary for the period 2007 to 2041 were 9 653 million euro. The total contribution from Euratom was set at 7 649 million euro, of which a maximum of 15 % for administrative expenditure. Other resources consist of contributions from the ITER host state (France), the annual membership contributions, voluntary contributions from members other than Euratom, and additional resources to be received under terms approved by the Governing Board. The Court draws attention to the requirement for substantially increased resources for the ITER project (see paragraphs 27-29).

5.

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 (5) of the European Joint Undertaking for ITER and the Development of Fusion Energy, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

6.

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 (8).

7.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the Joint Undertaking's Financial Regulation, under his own responsibility and within the limits of the authorised appropriations (9). The Director is responsible for putting in place (10) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (11) 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.

8.

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.

9.

The Court conducted its audit in accordance with the IFAC and ISSAI (12) 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.

10.

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.

11.

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

12.

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 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation.

13.

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

14.

The comments which follow do not call the Court's opinions into question.

15.

The final budget included commitment appropriations of 444,1 million euro and payment appropriations of 241,7 million euro. Carry-overs from 2009 amounted to 106,8 million euro in commitment appropriations and 52,2 million euro in payment appropriations (mainly appropriations accruing from the ITER host state and assigned to the ITER construction). The utilisation rate for payment appropriations was only 63,4 % (13) as a result of the delays in implementing activities and this is also reflected in the high cash balance, which amounted to 78,8 million euro at the end of the year (26,8 % of the available payment appropriations in 2010).

16.

The Court of Auditors reported in its two previous Specific Annual Reports that the Joint Undertaking's internal control systems had not been fully established and implemented as required by its Financial Regulation (14). Similarly, on 31 May 2010 the Joint Undertaking's Internal Auditor issued a report on the financial circuits which raised concerns about the financial circuits and the separation of duties.

17.

In response to this, the Governing Board adopted a management improvement plan in June 2010 and, in October, a proposal to change the organisational structure. The new organisational structure (15) became operational on 1 January 2011.

18.

Despite these changes, the responsibility for the financial circuits had still not been fully assigned at the time of the audit (April 2011), since some key posts were still vacant (16) (e.g. Head of ITER department, Head of Administration and Head of Budget and Finance unit).

19.

While the financial and accounting systems (ABAC and SAP) used by the Joint Undertaking are owned by the Commission and have been validated by the Accounting Officer, the other important business processes which provide financial information have not yet been validated. As mentioned in the Court's 2009 report (17), an appropriate tool for the management of the operational contracts (ABAC contracts or similar), integrated with the budget and financial reporting systems, is not yet in place.

20.

The Court tested a sample of nine procurement and six grant award procedures. For three of the nine procurement procedures audited, only one offer had been received by the Joint Undertaking. For the grants, the average number of proposals received was only one per call. While recognising the fact that the Joint Undertaking is operating in a highly specialised industrial area, the Court recommends that it should make further efforts to maximise competition and should follow the value-for-money principle in the call preparation, publication, evaluation and contract management phases.

21.

The controls applied by the Joint Undertaking before payments are made under grant agreements are not sufficiently documented to provide assurance regarding compliance with the financial requirements and the eligibility of the underlying costs (18).

22.

The Court welcomes the fact that the Joint Undertaking has started to develop an ex-post audit strategy, to be implemented in 2012. The ex-post audit strategy is a key control aiming to assess the legality and regularity of the underlying transactions and should be put in place as soon as possible. It should also cover grants and operational procurement contracts.

23.

In 2008 and 2009, the Court observed that a number of Members of the Joint Undertaking did not pay their membership contributions within the deadline set by the Governing Board. For 2010, the deadline was 31 May 2010 but only 14 out of the 28 Members paid on time.

24.

The Court pointed out in its Opinion No 4/2008 that the Financial Regulation of the Joint Undertaking does not refer to the powers of the Commission's internal auditor to perform audits of the Joint Undertaking. Although the Financial Regulation of the Joint Undertaking has not yet been amended to include the powers of the Commission's internal auditor (19), 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.

25.

The Court also pointed out in its Opinion No 4/2008 that, in view of the size of the budget and the complexity of the tasks to be performed by the Joint Undertaking, an Audit Committee reporting directly to the Governing Board should be set up. The Court welcomes the decision of the Governing Board to set up an Audit Committee (20).

26.

The host agreement on the site and support, privileges and immunities that was signed between the Kingdom of Spain and the Joint Undertaking on 28 June 2007 states that permanent premises are to be made available to the Joint Undertaking no later than 3 years after the signing of the agreement. At the time of the audit, permanent premises had not been made available to the Joint Undertaking.

27.

In May 2010, the Commission issued a communication to the European Parliament and to the Council on the status of the ITER project (21), in which it estimated that around 1,4 billion euro will be needed to meet the cost increases in the Euratom contribution to ITER in 2012 and 2013.

28.

In July 2010, the Commission made a proposal to amend the current multiannual financial framework and to meet the additional financial needs for 2012 and 2013 (22). The European Parliament and the Council did not reach an agreement on this proposal. At the time of the audit (April 2011), the financing of the EU contribution to the ITER project remained unresolved.

29.

The Court notes that these developments may significantly affect the activities and the budget of the Joint Undertaking and possibly delay the Euratom contribution to the construction phase of the ITER project.