9.12.2015 |
EN |
Official Journal of the European Union |
C 409/175 |
REPORT
on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2014 together with the Authority’s reply
(2015/C 409/20)
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 and an analysis of management representations. |
STATEMENT OF ASSURANCE
The management’s responsibility
The auditor’s responsibility
Opinion on the reliability of the accounts
Opinion on the legality and regularity of the transactions underlying the accounts
|
10. |
The comments which follow do not call the Court’s opinions into question. |
COMMENTS ON BUDGETARY MANAGEMENT
11. |
The overall level of committed appropriations was high at 95 %. The level of committed appropriations carried over also remained high at 5,6 million euro, i.e. 26 % (2013: 5,2 million euro, i.e. 28 %), particularly for the operational budget (title III) at 4,7 million euro, i.e. 66 % (2013: 3,7 million euro or 85 %). Carry-overs are mainly related to specific contracts with a cumulative value of 2,4 million euro signed late in the year, particularly for the on-going development and maintenance of a database (1,8 million euro) and other IT services to be provided in 2015. Part of the committed appropriations carried over are related to budget transfers made in November and December 2014, when the Authority increased the operational budget (title III) by 1,1 million euro (19 %) through transfers from the staff budget (title I) of 8 58 828 euro and from administrative expenditure (title II) of 2 66 360 euro. The transfers were intended to compensate for shortfalls in the Authority’s 2015 budget following substantial budget cuts decided by the discharge authorities. These shortfalls would not have allowed the Authority to continue implementing its multiannual IT strategy, which was one of its core operational activities. |
12. |
Although budget transfers, carry-overs and related commitments are in line with the specific provisions of the EU Financial Regulation and were executed following Management Board decisions, the extent to which 2015 activities will be covered by 2014 appropriations is at odds with the budgetary principle of annuality. There is a need to better align the funds made available in the agency’s annual budgets with the financial needs for the implementation of its multiannual IT strategy. |
FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS
13. |
An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.
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 statement of financial performance, 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) Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).
(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 107 of Regulation (EU) No 1271/2013.
(8) Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).
ANNEX I
Follow-up of previous years’ comments
Year |
Court’s comment |
Status of corrective action (Completed/Ongoing/Outstanding/N/A) |
2012 |
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. |
N/A |
2013 |
The Management Board adopted the Authority’s 16 Internal Control Standards in March 2013. At the end of the year, their implementation was ongoing on the basis of a clear action plan agreed with the Commission’s Internal Audit Service. |
Completed |
2013 |
Legal commitments were not always authorised by officers with a proper delegation and were not always preceded by a properly authorised budgetary commitment. This shows the need to improve the definition of, and compliance with, financial circuits in accordance with the Financial Regulation. |
Completed |
2013 |
The overall level of committed appropriations was 95 %. However, the level of committed appropriations carried over further increased as compared with previous years and was high at 5,2 million euro (28 %), particularly for title II at 1,0 million euro (30 %) and title III at 3,7 million euro (85 %). This mainly resulted from specific contracts with a cumulative value of 3 million euro signed late in the year, particularly for the development and maintenance of a European database (2,6 million euro) and other IT services to be provided in 2014. Although the related commitments are legal and regular and low cancellation rates for carry-overs from 2012 confirmed sound estimations, the extent to which 2013 appropriations were used to cover 2014 activities is at odds with the budgetary principle of annuality. |
N/A |
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) |
Establish or ensure the functioning of the internal market, in accordance with the relevant provisions of the Treaties. Prepare draft technical standards as preparatory work for non-legislative acts of general application to supplement or amend certain non-essential elements of the legislative act or where uniform conditions for implementing legally binding Union acts are needed. |
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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 (one voting member per Member State), one representative of the Commission (non-voting), of the European Systemic Risk Board (non-voting), the European Banking Authority, the European Securities Markets Authority (both non-voting); observers may be permitted and the Executive Director may participate in meetings (non-voting). Tasks The Authority’s main decision-making body. Management Board (MB) Composition Chairperson of the Authority (voting), six Voting Members of the BoS (voting), one representative of the European Commission (voting for budget issues). The Executive Director 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 (EU) No 1094/2010. 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 (chair) and two Members of the Management Board. The Executive Director participates as observer. 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 2014 (2013) |
Final Budget Final Budget Appropriations: 2 1 5 95 704(1 8 7 67 470) euro Establishment Plan Statutory staff: 87 (80) posts authorised in the establishment plan, of which occupied: 87 (80) Establishment plan 100 % (100 %) fulfilled Contract staff posts: 37 planned in the budget, 33 occupied (22/19) Seconded National Expert posts: 21 (12) planned in the budget, of which occupied: 14 (11) Total: 134 (110) staff |
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Products and services in 2014 |
Regulatory tasks
Supervisory tasks
Consumer protection and financial innovation
Joint Committee
Common supervisory culture
Financial stability
Crisis management
External relations
Conferences/other public events 2014
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Source: Annex supplied by the Authority. |
THE AUTHORITY’S REPLY
11. |
EIOPA acknowledges that the percentage of carried-over appropriations from 2013 to 2014 and from 2014 to 2015 in title III was high; this was due to the multiannual nature of the work, the challenging time frame (mainly driven by the Solvency II calendar with the preparatory phase starting in 2015 and full implementation in 2016). In addition, the substantial cut of the 2015 EIOPA budget required the rationalisation of the 2014 budget to use the available resources effectively and efficiently in 2015, and minimise its impact on the ongoing IT projects, with an increased number of budget transfers to title III as a consequence. The carried-over commitments are critical to the continued execution of the IT implementation plan in accordance with the statutory timelines. It is to be expected that the carry-over percentages in the coming year will decline as EIOPA’s IT capability will be in place, reducing the need to carry over high amounts in title III to a strict minimum. |
12. |
EIOPA is aware that part of the 2015 activities are covered by a relatively high proportion of carried-over appropriations from 2014. This is explained by the need to finance its complex and multiannual IT plan, ensuring a proper implementation of Solvency II. With this IT plan being largely implemented in 2016, the level of carry-over appropriations will be limited in the future to a strict minimum, in line with the principle of annuality. In addition, in order to better align the budgetary funds available for the given year, EIOPA’s budget and procurement processes have already been revised to guarantee a full integration into the overall planning and coordination processes of EIOPA, within the framework of the Annual Work Programme. |