10.1.2013   

EN

Official Journal of the European Union

C 6/27

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 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 one 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.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertakingand an assessment of key controls of the supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

7.

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 2011 and the legality and regularity of the transactions underlying those accounts.

8.

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

9.

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 errors and for ensuring that the transactions underlying those accounts are legal and regular.

10.

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

11.

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 and professional requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free from material misstatement and whether the underlying transactions are legal and regular.

12.

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.

13.

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

14.

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 2011 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules.

15.

The ex-post audit strategy 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 (14). The ex-post audits that were completed as of September 2012 covered 2,2 million euro (18,8 % of accepted IMI JU contribution for the first call validated by the IMI Joint Undertaking by June 2011). The error rate resulting from these ex-post audits was 6,84 % (15).

16.

In the Court’s opinion, except for the effects of the matters described in paragraph 15, the transactions underlying the annual accounts of the Joint Undertaking for the year end 31 December 2011, are in all material respects, legal and regular.

17.

The comments which follow in paragraphs 18-32 do not call the Court’s opinions into question.

18.

The 2011 annual budget and implementation plan were adopted by the Governing Board on 4 April 2011 (16) due to the time taken 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 fourth call for proposals, signed five grant agreements for the third call for proposals and eight grant agreements for the second call for proposals.

19.

The implementation rate for the 159 million euro commitment appropriations available for research activities was 66 % and it was implemented through a global commitment covering the fourth call for proposals. The high level of unused appropriations of the administrative budget (44 %) indicates that it was not based on realistic estimates.

20.

Commitment appropriations amounting to 117 million euro and payment appropriations amounting to 65 million euro not used in the financial year 2010 were carried over to 2011 and commitment appropriations amounting to 62 million euro and payment appropriations amounting to 11 million euro not used during the financial year 2011 were carried over to 2012.

21.

The calls for proposals organised in 2008, 2009 and 2010 resulted in signed grant agreements amounting to 269 million euro at the end of 2011. In 2011 the fourth call for proposals was launched with an indicative budgeted EU contribution of 105 million euro. In 2012 the fifth call for proposals was launched with an indicative budgeted EU contribution of 80 million euro. Consequently, if calls for proposals remain at the current level, it is highly likely that the total available EU contribution will not be used.

22.

In the report on budgetary and financial management, the total amount of chapter 30-C2 ‘Research agenda’ (117 million euro) is lower than the budget line B03000-C2 (141 million euro) which is part of the aforementioned chapter. In addition, the Governing Board Decision of 28 January 2011 only authorises the carry-over of 115 million euro of commitment appropriations, while the report on budgetary and financial management discloses a carry-over of 117 million euro.

23.

During 2011 significant progress regarding internal control systems was noted. However, further work is needed to establish and document the budget and accounting procedures and related controls. In addition, no formal assessment of the internal control system was carried out during 2011.

24.

The Accounting Officer reported on the validation of the accounting system on 27 September 2012 and underlined significant weaknesses which need to be addressed (17).

25.

The methodology for evaluating in-kind contributions (18) was approved by the Governing Board on 11 November 2011. The in-kind contributions are validated by way of an ex-ante certification and ex-post audits. In 2011 no ex-ante certification and no ex-post audit were carried out.

26.

In 2011 the Commission’s Internal Audit Service and ther Internal Audit Capabilty of the Joint Undertaking carried out a risk assessment exercise and the strategic audit plan for 2012-2014 was approved by the Governing Board on 3 November 2011.

27.

The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 8 March 2011. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (19).

28.

The Joint Undertaking obtained its autonomy in November 2009, but no internal assurance audit work was performed until March 2012 either by the Internal Audit Service of the Commission or the internal audit manager. The internal audit manager has been directly involved in operational activities (implementation of ex-post strategy, KPI framework, review of ex-ante certificate on in-kind contributions) and other consultancy engagements.

29.

The provisions of the grant agreement do not recognise the right of the Court of Auditors to audit the in-kind contributions of EFPIA companies although they are recorded in IMI’s financial statements. It is estimated that these contributions will represent approximately one billion euro over IMI’s lifetime.

30.

A host agreement was concluded on 2 February 2012 between the Joint Undertaking and Belgium concerning the office accommodation, privileges and immunities and other support to be provided by Belgium.

31.

During 2011 the Joint Undertaking made progress on the formalisation of IT security policies. However, the business continuity plan and disaster recovery plan were not finalised.

32.

According to Article 6.4 of the Statutes of the Joint Undertaking and Article 41 of the IMI Joint Undertaking’s financial rules, the Executive Director is required to draw up an annual activity report including a declaration of assurance stating that the information contained in the report presents a true and fair view except as otherwise specified in any reservation. The declaration of assurance was issued in February 2012 without reservation despite the lack of information on the effectiveness of the ex-post audit strategy, which is the key control for operational expenditure.