C:2008:318:FULL

EUR-Lex

Access to European Union law

This document is an excerpt from the EUR-Lex website

EUROPA
EUR-Lex home
EUR-Lex - C:2008:318:FULL - EN

Help

Search tips

Need more search options? Use the Advanced search

Document C:2008:318:FULL

Help

Official Journal of the European Union, C 318, 12 December 2008

Display all documents published in this Official Journal

HTML

PDF

		ISSN 1725-2423
Official Journal of the European Union		C 318

English edition	Information and Notices	Volume 51 12 December 2008

Notice No	Contents	page
	IV Notices
	NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES
	Court of Auditors
2008/C 318/01	Report by the external auditor on the Court of Auditors' accounts for the financial year 2007	1


2008/C 318/02	Note to the reader (see page 3 of the cover)	s3

IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES

Court of Auditors

12.12.2008

Official Journal of the European Union

C 318/1

REPORT BY THE EXTERNAL AUDITOR ON THE COURT OF AUDITORS' ACCOUNTS FOR THE FINANCIAL YEAR 2007

(2008/C 318/01)

NOTE TO READERS

Without prejudice to the provisions of Article 248 of the Treaty establishing the European Community, which gives the Court of Auditors responsibility for auditing all of the Community's revenue and expenditure, and the provisions of Article 276 of the said Treaty on the granting of the discharge, the Court of Auditors has had its revenue and expenditure accounts audited by an external auditor every year since the close of the financial year 1987.

The reports which the external auditor of the Court of Auditors drew up in respect of the Court's accounts for the financial years 1987 to 1991 were sent only to the Chairman of the European Parliament's Budgetary Control Committee.

Pursuant to a decision taken by the Members of the Court of Auditors at the Court meeting of 8 July 1993, the external auditor's reports have since been published in the Official Journal of the European Union, starting with the report on the financial year 1992.

For the Court of Auditors

Michel HERVÉ

Secretary-General of the European Court of Auditors

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007

CONTENTS

Report of the Independent Auditor

Balance sheet

Economic outturn account

Cash flow statement

Statement of changes in equity

Accounting policies and notes to the financial statements

1.	Regulations and presentation of the accounts

2.	Significant accounting policies and presentation of the financial statements

3.	Notes to the balance sheet

4.	Notes to the economic outturn account

5.	Off balance sheet

Independent assurance report

Independent Auditor's report

To the Management of the

European Court of Auditors

We have audited the accompanying financial statements of the European Court of Auditors, which comprise the balance sheet as at 31 December 2007, the economic outturn account, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

The Management of the European Court of Auditors are responsible for the preparation and fair presentation of these financial statements in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation, and the European Court of Auditors' Accounting Rules. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the ‘Institut des Réviseurs d'Entreprises’. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management of the European Court of Auditors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these financial statements give a true and fair view of the financial position of the European Court of Auditors as of 31 December 2007, and of its financial performance and its cash flows for the year then ended in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002, Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said Council Regulation and the European Court of Auditors' Accounting Rules.

Luxembourg, 1 July 2008

PricewaterhouseCoopers S.à r.l.

Réviseur d'entreprises

Represented by

Marianne WEYDERT

Balance sheet as of 31 December 2007

The accompanying notes form an integral part of these financial statements.

(EUR)
Assets	Note	31 December 2007	31 December 2006
Intangible fixed assets		209 449	591 516
Tangible fixed assets	3.1.	33 283 667	35 620 496
Long-term receivables		550	74
Total non-current assets		33 493 666	36 212 086
Short-term receivables	3.2.	1 679 772	1 992 778
Cash and cash equivalents	3.3.	2 012 791	1 807 092
Total current assets		3 692 563	3 799 870
Total assets		37 186 229	40 011 956

(EUR)
Liabilities	Note	31 December 2007	31 December 2006
Capital		–13 098 711	–11 418 315
Accumulated deficit		–11 418 315	–11 450 318
Economic result of the year — profit+/loss–		–1 680 396	32 003
Employee benefits	3.4.	41 867 460	44 146 971
Other long-term liabilities	3.5.	175 000	201 995
Total non-current liabilities		42 042 460	44 348 966
Provisions for risks and charges	3.6.	1 927 531	2 008 320
Accounts payable	3.7.	6 314 949	5 072 985
Total current liabilities		8 242 480	7 081 305
Total liabilities		37 186 229	40 011 956

Economic outturn account for the year ended 31 December 2007

(EUR)
	Note	2007	2006
Funds transferred from the Commission to other institutions	4.1.	90 474 401	82 296 774
Revenues from administrative operations	4.2.	16 339 509	15 907 326
Other operating revenue	4.3.	210 887	355 529
Total operating revenue		107 024 797	98 559 628
Administrative expenses		– 109 022 598	–99 847 625
Staff expenses	4.4.	–84 209 144	–78 717 811
Fixed asset related expenses	3.1 & 4.5	–3 426 683	–3 637 514
Other administrative expenses	4.6.	–21 386 771	–17 492 300
Operational expenses		–32 486	–19 493
Total operating expenses		– 109 055 084	–99 867 118
Surplus/(deficit) from operating activities		–2 030 287	–1 307 490
Financial revenues	4.7.	105 517	80 199
Financial expenses	4.8.	–15 096	–15 025
Movement in pensions (- expense, + revenue)	3.4. & 4.9.	259 470	1 274 319
Surplus/(deficit) from non operating activities		349 891	1 339 493
Economic result of the year		–1 680 396	32 003
The accompanying notes form an integral part of these financial statements.

Cash flow statement for the year ended 31 December 2007

(EUR)
	2007	2006
Cash flows from ordinary activities
Surplus/(deficit) from ordinary activities	–1 680 396	32 003
Operating activities — Adjustments
Amortization (intangible fixed assets) (+)	55 323	268 240
Depreciation (tangible fixed assets) (+)	3 321 950	2 440 049
Increase/(decrease) in provisions for risks and liabilities	–80 789	–23 290
(Increase)/decrease in long-term receivables	– 475	—
(Increase)/decrease in short-term receivables	309 862	769 309
(Increase)/decrease in receivables EC entities	3 144	15 444
Increase/(decrease) in other long-term liabilities	–26 995	26 995
Increase/(decrease) in accounts payable	1 192 756	378 360
Increase/(decrease) in liabilities related to consolidated EC	49 208	–1 010 845
(Gains)/losses on sale of property, plant and equipment	666 205	—
Net cash flow from operating activities	3 809 793	2 896 265
Cash flows from investing activities
Purchase of tangible and intangible fixed assets (–)	–1 362 613	–1 314 108
Proceeds from tangible and intangible fixed assets (+)	38 030	925 007
Net cash flow from investing activities	–1 324 583	– 389 101
Increase/(decrease) in employee benefits	–2 279 511	–3 546 954
Net increase/(decrease) in cash and cash equivalents	205 699	–1 039 790
Cash and cash equivalents at the beginning of the period	1 807 092	2 846 882
Cash and cash equivalents at the end of the period	2 012 791	1 807 092
The accompanying notes form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2007

(EUR)
Capital	Accumulated deficit	Economic result of the year the year	Capital (total)
Balance as of 31 December 2006	–11 450 318	32 003	–11 418 315
Allocation of the economic result of previous year	32 003	–32 003	—
Economic result of the year	—	–1 680 396	–1 680 396
Balance as of 31 December 2007	–11 418 315	–1 680 396	–13 098 711
The accompanying notes form an integral part of these financial statements.

ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

1. Regulations and presentation of the accounts

The European Court of Auditors (hereafter the Court) was established by the Treaty of Brussels of 22 July 1975 and started operating as an external Community audit body in October 1977, with its headquarters in Luxembourg.

The Court is the EU institution established by the Treaty to carry out the audit of EU finances. As the EU's external auditor it contributes to improving EU financial management and acts as the independent guardian of the financial interests of the citizens of the European Union.

The Court renders audit services through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. The Court communicates the results of its audits in clear, relevant and objective reports. It also provides its opinion on financial management issues.

The Court promotes accountability and transparency and assists the European Parliament and Council in overseeing the implementation of the EU budget, particularly during the discharge procedure.

The financial year of the Court runs from 1 January to 31 December.

2. Significant accounting policies and presentation of the financial statements

2.1. Basis of presentation

The accounts of the Court are drawn up in accordance with the provisions of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities and with the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of the said financial Council Regulation.

The financial statements are prepared in accordance with the Accounting Rules of the European Communities, which have been inspired by International Public Sector Accounting Standard (IPSAS). These Accounting Rules are adopted by the Accounting Officer of the Commission after a consultation of the other institutions.

2.2. Valuation of foreign currency balances and transactions

Monetary items denominated in currencies other than EUR are translated into EUR at the exchange rate effective at the reporting date.

Non-monetary items carried at a historical cost denominated in a currency other than EUR are reported using the exchange rate at the date of acquisition.

Non-monetary items carried at a fair value denominated in a currency other than EUR are reported using the exchange rates that existed when the values were determined.

2.3. Intangible and tangible fixed assets

The intangible and tangible fixed assets are stated at historical cost less depreciation/amortisation and impairment. Low value items below EUR 420 are accounted as expenses during the year of acquisition. Assets delivered during the accounting year but not paid at year-end are reported as ‘under construction’.

Depreciation/amortisation is calculated by the straight-line method, starting the month of acquisition and charged over their estimated useful lives, as follows:

Intangible (Licences for computer software)	4 years
Buildings	25 years
Plant, machinery and tools	4, 8 years
Furniture and vehicle fleet	4, 8, 10 years
Computer hardware	4 years
Fittings specific to leased buildings	The duration of the lease
Other fixtures and fittings	6 years

2.4. Employee benefit

Employee benefits represent the future pension rights of the Members of the Court. Under Article 19 of Council Regulation (EEC, Euratom, ECSC) No 2290/77 of 18 October 1977 determining the emoluments of the Members of the Court of Auditors (OJ L 268, 20.10.1977, p. 1), the benefits provided for in this pension scheme are entered in the budget of the Communities and the Member States jointly guarantee their payment.

The amounts guaranteed by the Member States are based, on the one hand, on the Accounting Rule No 12 ‘Employee benefits’ adopted by a decision of the Commission's accounting officer pursuant to Article 133 of the Financial Regulation applicable to the general budget of the European Communities, and, on the other hand, on the basis of an actuarial analysis carried out by the experts of the specialised PMO unit at the Commission.

2.5. Provisions for liabilities and charges

Provisions for liabilities and charges are intended to cover losses or debts the nature of which is clearly defined and which, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise.

3. Notes to the balance sheet

3.1. Tangible fixed assets

The movements in tangible fixed assets during the year 2007 were:

(EUR)
	Gross book value 1 January 2007	Additions	Disposals	Gross book value 31 December 2007	Accumulated depreciation 31 December 2007	Net book value 31 December 2007
Land	776 630	—	—	776 630	—	776 630
Buildings	52 074 987	—	—	52 074 987	–21 887 128	30 187 859
Plant, machinery and tools	1 198 673	126 083	–68 534	1 256 222	– 917 760	338 462
Computer hardware	3 867 333	921 863	– 426 784	4 362 412	–3 268 464	1 093 948
Furniture and vehicle fleet	1 845 083	95 793	– 225 307	1 715 569	–1 179 800	535 769
Other fixtures and fittings	1 043 800	—	—	1 043 800	– 782 848	260 952
Assets under construction	199 254	90 047	– 199 254	90 047	—	90 047
Total	61 005 760	1 233 786	– 919 879	61 319 667	–28 036 000	33 283 667

3.2. Short-term receivables

(EUR)
	31 December 2007	31 December 2006
Current receivables due to the transfer of national pension rights by staff	628 778	846 304
Deferred charges for building rentals and IT contracts	560 782	296 449
Sundry receivables mainly related to payroll and mission advances	485 079	841 749
Receivable from EC entities (Publications Office)	5 133	8 276
Total	1 679 772	1 992 778

3.3. Cash and cash equivalents

(EUR)
	31 December 2007	31 December 2006
Imprest account	1 000	1 000
Bank	2 011 791	1 806 092
Total	2 012 791	1 807 092

3.4. Employee benefits

Since 2006, the calculation for future pension payments obligations is computed net of the taxes recovered on the future pension payments. In the financial statements as at 31 December 2006, all institutions of the Communities had used a tax rate of 12,4 %. As at 31 December 2007, all institutions were instructed to fine-tune the computation based on their own historical data over the last three years. This reassessment of the tax rate for the Court leads to an average tax rate of 17,7 %. Although the general computation method of the pension liability remains the same, the revised tax rate impacts on the variation in 2007 of the pension liability. As indicated in the table below, the pension provision decreases by EUR 2 279 511 instead of an increase of EUR 416 693 had the tax rate remained unchanged.

(EUR)
Pension liability and effect of the revised tax rate
	Financial statements 31.12.2006 (12,4 %)	p.m. 31.12.2007 (12,4 %)	Financial statements 31.12.2007 (17,7 %)
Gross amount	50 396 086	50 871 762	50 871 762
Tax rate (%)	12,40 %	12,40 %	17,70 %
Taxes	6 249 115	6 308 098	9 004 302
Net amount	44 146 971	44 563 664	41 867 460
Variation in 2007 of net pension liability		– 416 693	2 279 511

3.5. Long-term liabilities

The amount of EUR 175 000 is contractually due at the termination of the rental of the building K9.

3.6. Provision for risks and charges

The amount corresponds to the value, net of taxes, of untaken holidays owed to staff as at 31 December 2007.

3.7. Accounts payable

(EUR)
	31 December 2007	31 December 2006
Accrued charges consist of expenses incurred but not yet invoiced of which EUR 1 100 000 was booked in 2007 to cover the expenses incurred for the preparation of the building K3	5 250 342	3 706 745
Sundry payables to staff (statutory rights, staff medical insurance)	522 592	557 087
Current payables to suppliers	484 724	801 070
Accounts payable against consolidated EC entities mainly to the European Parliament and to the Translation Centre	57 291	8 083
Total	6 314 949	5 072 985

4. Notes to the economic outturn account

4.1. It corresponds to the monthly calls for funds made by the Court to the Commission to replenish its bank account.

4.2. For the most part, this heading is made up of deductions from the salaries of Members and staff in respect of tax and social contributions.

4.3. ‘Other operating revenue’ arises among others from the sales of publications by the Publications Office.

4.4. The salaries of Members and staff of the Court represent 96 % of this amount. The rest includes the salaries of the contractual agents and temporary staff.

4.5. The fixed assets related expenses consist of the depreciation/amortisation of the tangible and intangible assets.

4.6. The most significant items in this heading are:

—	buildings' rental and associated charges including costs for the K3,

—	IT and telecommunications,

—	missions expenses,

—	cleaning and security services.

4.7. Bank interest earned on the Court's current account.

4.8. Bank charges levied on the Court's current account.

4.9. This amount includes:

(EUR)
Pension payments of the year	–2 020 041
Variation of Members' net pension liability	2 279 511
Total	259 470

5. Off balance sheet

5.1. Contingent assets

The following bank guarantees have been given by suppliers following contractual obligations:

(EUR)

2007

—	Travel agency

50 000

—	Car pool leasing

75 000

—	Insurance company

1 361

Total

126 361

5.2. Commitments for future funding

In respect of current office rental contracts, the outstanding rental commitments amount to EUR 6 347 948, detailed as follows:

(EUR)

2007

—	K8 building

3 243 684

—	K9 building

2 894 873

—	Brussels ‘Antenne’

61 833

—	Other (Cetrel, parking, Maison de l'Europe)

147 558

Subtotal

6 347 948

Operating lease for cars and copy machines

1 174 806

Commitments against appropriations not yet consumed -RAL-, after deduction of accruals for 2007

2 859 584

Total

10 382 338

5.3. The Court's buildings projects

As concerns its major buildings projects, the Court concluded on 15 December 1999 a framework contract with the Luxembourg State covering the construction of one or more extensions to the Court's building and a first extension has been built (the K2 building).

The Luxembourg State agreed to cede to the Court the right to use the land made available for building this first extension for a period of 49 years and for a price of EUR 1.

Any further building leases on other land needed for the other extensions must not exceed the expiry date of the building lease granted for the first extension.

The Luxembourg State also undertook to sell the land at any time at the market rate determined by a joint expert opinion.

For its part, the Court undertook to do all it can to purchase the land from the Luxembourg State. It would ask the budgetary authority for the necessary funds.

The Court has decided to go ahead with the construction of a second extension (the K3 building) and, because of different arrangements for carrying out the project, the Luxembourg State and the Court have concluded a new framework agreement on 22 February 2008. On signing it, the Court became liable to reimburse the State an amount of EUR 1 058 560 committed on the Court's behalf for the studies of the architect and engineers. Reimbursement will be made on the basis of amounts paid by the State and for which supporting documents are presented. An accrual of EUR 1 100 000 is included in the accounts to cover this liability.

As regards the two pieces of land relative to the two extensions mentioned above, the State will now sell these to the Court for a symbolic 1 euro. For its part, should the Court ever consider ceding one or other of the buildings to a third party other than a Community body or institution, the Court will return the land to the ownership of the State in return for a symbolic 1 euro, the latter disposing also of an option to buy the building at a price to be determined by an independent expert. In case the State decides not to exercise this option, it would provide a right to use the land to the purchasers of the building.

5.4. Potential liability for litigations

None.

Independent assurance report

To the Members of the

European Court of Auditors

We have examined that the financial resources assigned to the European Court of Auditors (hereafter the Court) have been used for their intended purposes and that the control procedures put in place by the authorising officers provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations for the financial resources made available and used for the period from 1 January to 31 December 2007.

The maintenance of books and records and the establishing and maintaining of appropriate controls are the responsibility of the Management of the Court. Our responsibility is to express our opinion based on our examination.

We conducted our examination in accordance with the International Standard on Assurance Engagements ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ (ISAE 3000) as adopted by the ‘Institut des Réviseurs d'Entreprises’. This standard requires that we plan and perform our examination such that misuse of the resources materially affecting the books of the Court are detected with reasonable assurance. Our work consisted primarily of examining on a test and sample basis, evidence supporting the fact that:

—	the resources assigned to the Court have been used for their intended purposes,

—	the control procedures put in place provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations.

The criteria used for our examination are the following rules and regulations:

—	Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget (hereafter the Budget) of the European Communities (hereafter the Financial Regulation),

—

Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (hereafter the Implementing Rules),

—

Decision No 36/2007 of the European Court of Auditors relating to the Internal Rules for the implementation of its Budget adopted on 12 and 19 July 2007. These provisions form part of the procedures established by the Treaties, or agreements made by virtue thereof, which concern the operational process linked to the implementation of the Budget.

In particular, the following Internal Rules have been used as criteria:

—	Article 7 — Signatures — ‘Each of the parties involved in the drafting, control and registration of operations to establish and recover revenue or to commit sums and make payments shall sign and date their involvement’,

—	Article 9 — Building projects — ‘Before the Court gives its approval to any contractual undertaking concerning such a project, the service responsible shall submit an explanatory document justifying the compatibility of the project with the financial framework’,

—	Article 16 — Making payments — ‘The accounting officer shall execute the payment orders defined in Article 80 of the Financial Regulation after he has checked the mandatory details described in Articles 103(1) and 104 of the Implementing Rules’,

—	Article 23.1 — Transfers of appropriations — ‘Pursuant to Article 21 of the Financial Regulation, appropriations shall be earmarked for specific purposes by title and chapter; the chapters shall be further subdivided into articles and items’,

—	Article 23.2 — Transfers of appropriations — ‘All requests for transfer shall explain why the appropriations are insufficient. The request for transfer shall be signed by the responsible director’,

—

Article 24 — Carry-overs of appropriations — ‘The responsible authorising officer shall prepare a listing showing the available balance of commitments; this balance, shall be adjusted in the budgetary accounts by taking into consideration the appropriations to be cancelled, and shall show the appropriations to be carried forward’,

—	Article 26 — Property inventories — ‘The inventory of tangible assets shall be kept in a database’,

—

Article 27 — Minimum management and internal control procedures — ‘The management and internal control procedures are drawn up by the authorising officers in accordance with the minimum internal control standards adopted by the Court. Each budget operation is handled (…) by the person responsible for ex ante verification. (…) If the person responsible for ex ante verification establishes that the operation in question satisfies the requirements of Article 47(3) of the Implementing Rules, he validates it and documents this validation’.

We believe our examination provides a reasonable basis for our opinion.

Based on our work described in this report, nothing has come to our attention that causes us to believe that in all material respects and based on the criteria described above:

(a)	the resources assigned to the Court have not been used for their intended purposes;

(b)	the control procedures in place do not provide the necessary guarantees to ensure the compliance of financial operations with the applicable rules and regulations.

Our report is solely for the purpose set forth in the first paragraph and for your information and is not to be used for any other purpose or to be distributed to any other parties.

Luxembourg, 1 July 2008

PricewaterhouseCoopers S.à r.l.

Réviseur d'entreprises

Represented by

Marianne WEYDERT

12.12.2008

Official Journal of the European Union

C 318/s3

NOTE TO THE READER

The institutions have decided to no longer quote in their texts the last amendment to cited acts.

Unless otherwise indicated, references to acts in the texts published here are to the version of those acts currently in force.

Top

Choose the experimental features you want to try