RESOLUTION (EU) 2017/1724 OF THE EUROPEAN PARLIAMENT

of 27 April 2017

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (now European Border and Coast Guard Agency (‘Frontex’)) for the financial year 2015

THE EUROPEAN PARLIAMENT,

—	having regard to its decision on discharge in respect of the implementation of the budget of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (now European Border and Coast Guard Agency) for the financial year 2015,

—	having regard to Special report No 12/2016 of the Court of Auditors, ‘Agencies' use of grants: not always appropriate or demonstrably effective’,

—	having regard to Rule 94 of and Annex IV to its Rules of Procedure,

—	having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Civil Liberties, Justice and Home Affairs (A8-0137/2017),

whereas, according to its financial statements, the final budget of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (now European Border and Coast Guard Agency) (the Agency) for the financial year 2015 was EUR 143 300 000, representing an increase of 46,31 % compared to 2014; whereas the increase was mainly due to two amendments for the relevant operations in the Mediterranean amounting to EUR 28 000 000,

B.	whereas, according to its financial statements, the overall contribution of the Union to the Agency's budget for 2015 amounted to EUR 133 528 000, representing an increase of 53,82 % compared to 2014,

whereas the Court of Auditors (the Court), in its report on the annual accounts of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States for the financial year 2015 (‘the Court's report’), has stated that it has obtained reasonable assurances that the transactions underlying the Agency's annual accounts are legal and regular,

Basis for the qualified opinion on the reliability of the accounts

Acknowledges that the Court issued a qualified opinion on the reliability of the Agency's accounts; notes that the basis for the qualified opinion was the underestimation of the cost incurred in 2015 but not yet invoiced for pre-financed services related to maritime surveillance by EUR 1 723 336; notes moreover that this accounting error affected the accrued charges and resulted in a material misstatement in the Agency's balance sheet and statement of financial performance; points out however that the accounting error did not lead to any irregular or illegal transactions, and that no funds were misspent;

Regrets that the estimation of costs to be accrued was carried out by the accounting officer based on a report which excluded a part of the pre-financing to be accrued; is concerned that this omission was not realised on time by the accounting officer, and that the accounting officer did not consult his counterpart in the partner agency; notes that, as a result, a part of the potentially to be accrued costs was not taken into consideration during the preparation of the accounts;

Acknowledges that the Agency has already taken corrective measures to prevent such issues from taking place in the future; notes in particular that the Agency's accounting officer responsible for estimating correctly the accruals will base the estimations on all relevant data and information available, including information from partner agencies which are concerned by the accruals; accepts that the Agency's authorising officer will increase the efforts on his part to ensure that such shortfalls are not repeated by cross-checking the available data and by cooperating more closely with the accounting officer;

Notes that, in the Court's opinion, except for the effects of the matter regarding the underestimation of the incurred but not yet invoiced costs, the Agency's annual accounts present fairly, in all material respects, its financial position as at 31 December 2015 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;

Comments on the legality and regularity of transactions

Notes that, according to the Court's report, in 2015 the Agency carried out the ex post audit in relation to Iceland and detected irregular payments, relating to the depreciation of a vessel participating in seven joint operations from 2011 to 2015, amounting to EUR 1 400 000; notes in particular that the Icelandic coast guard claimed the reimbursement of depreciation for the vessel which had exceeded its useful life as provided for in the Agency's guidelines;

Acknowledges that the implementing rules to the Agency's financial regulation provide that the authorising officer may waive recovery of an established amount where recovery is inconsistent with the principle of proportionality; acknowledges furthermore that, in line with that principle, and after having received external legal advice, the authorising officer announced the recovery of EUR 600 000, which covers the grants awarded since 2014; notes that for the same reason the authorising officer announced the decision not to reimburse EUR 200 000 due in 2016; understands that, since the inception of ex post controls by the Agency and in order to respect the principle of transparency and equal treatment towards the Agency's beneficiaries, which are Member States' public authorities dealing with border management and migration issues, the authorising officer acted in accordance with the Agency's best practice of recovering irregular payments referring to the last two years of cooperation;

Notes that, according to the Court's report, the existence of an unaddressed risk of double funding relating to the Internal Security Fund (ISF); recalls that the ISF, which is set up for the period 2014 to 2020 and is composed of the ISF Borders and Visa and ISF Police instruments, has EUR 3 800 000 000 available for funding actions; recalls moreover that the Commission, under the ISF Borders and Visa instrument, reimburses Member States' purchases of means, such as vehicles or vessels, as well as running costs such as fuel consumption or maintenance; points out that the Agency also reimburses such costs to participants in joint operations; acknowledges that the Agency, in cooperation with the Commission's Directorate-General for Migration and Home Affairs, put in place measures which mitigate that risk; notes in particular that those measures include access to the ISF database, where all plans and reports of the beneficiaries are made available, training on the functionalities of the Shared Fund Management common system, as well as carrying out ex ante and ex post controls by checking supporting documents and simultaneously raising awareness of the issue amongst the beneficiaries;

Budget and financial management

Notes with satisfaction that the budget monitoring efforts during the financial year 2015 resulted in a budget implementation rate of 99,86 %, representing an increase of 1,21 % compared to 2014; notes that the payment appropriations execution rate was 69,50 %, representing a decrease of 0,71 % compared to 2014;

Commitments and carry-overs

Notes that the level of carry-overs for committed appropriations for Title II (administrative expenditure) was at EUR 3 200 000 (38 % of committed appropriations), compared to EUR 4 500 000 (36 %) in 2014; notes moreover that the carry-overs for Title III (operational expenditure) were at EUR 40 200 000 (35 %), compared to EUR 28 400 000 (44 %) in 2014; acknowledges that the carry-overs for Title II were mainly related to the IT contracts extending beyond the year-end, whereas the carry-overs for Title III were related to the multiannual nature of the Agency's operations; acknowledges furthermore that the Agency is to continue its efforts to reduce the amounts of carry-overs with a view to better honouring the budgetary principle of annuality;

10.

Notes that carry-overs can often be partly or fully justified by the multiannual nature of the agencies' operational programmes, do not necessarily indicate weaknesses in budget planning and implementation and are not always at odds with the budgetary principle of annuality, in particular if they are planned in advance and communicated to the Court;

Procurement and recruitment procedures

11.

Notes from the Agency that it launched 34 recruitment procedures in 2015, out of which 14 were to be finalised in 2016; notes furthermore that the Agency recruited 47 new members of staff in 2015;

Prevention and management of conflicts of interests and transparency

12.

Acknowledges that, in order to ensure the transparency of the Agency's public procurement procedures, it published in the Official Journal of the European Union the contracts awarded above the required thresholds while the contracts awarded below the required thresholds were published on the Agency's website;

13.

Acknowledges that the Agency published on its website the declarations of absence of conflicts of interest of its executive director and its deputy executive director; notes moreover that the few remaining unpublished declarations of absence of conflicts of interest of its management board members were related to the recent changes in the membership of the management board; acknowledges that the Agency will publish these declarations on its website once they have been received;

14.

Acknowledges the Agency's ongoing work on transparency; notes the need for progress and the establishment of the evaluation committees;

15.

Observes that all issues relating to conflicts of interest are covered by the Agency's code of conduct, which applies to all staff; notes with satisfaction that the Agency updated in 2016 its internal guidance to members of staff on understanding the concept of conflict of interest; notes with concern that the Agency did not provide for any checks of the factual correctness or a process for updating the declarations of absence of conflicts of interest;

16.

Notes that, according to the Court's report, Frontex did not sufficiently address the existing potential for conflicts of interest when setting up teams managing the negotiations of joint operation grants; calls on the Agency to introduce measures and an appropriate policy to safeguard the principles of transparency and ensure the absence of conflicts of interest on the part of negotiation teams;

17.

Notes that the Agency is in the process of finalising its internal whistleblowing rules; asks the Agency to report to the discharge authority on the establishment and implementation of those rules;

18.

Regrets the conclusions of the Court in its Special Report No 12/2016 that the Agency has not established an appropriate conflict of interest policy for members of staff of the bilateral negotiation teams; calls on the Agency to establish formal conflict of interest policies for external experts, internal staff and governing board members involved in the selection and award process of grants, taking into account the accumulated effect of several minor conflicts of interest and the need to define effective mitigating measures;

Internal control

19.

Notes from the Agency that it assessed the efficiency of its internal control system at the end of 2015; notes moreover that, according to the assessment, the Internal Control Standards (ICS) were implemented and functioning; notes however that, since the large increase in the Agency's budget allocation, there is an additional strain on the internal control system which requires further improvements; acknowledges that the Agency identified room for improvement in eight ICS and developed a strategy to address the weaknesses; looks forward to the Agency's next annual report and further details regarding the improvements of its internal control system;

Internal audit

20.

Notes that in 2015 the Internal Audit Service (IAS) conducted an audit on ‘Procurement and Asset Management’, which resulted in four recommendations rated as ‘Important’; acknowledges that the Agency prepared an action plan to address those recommendations;

21.

Takes note of the IAS's conclusions that no open recommendations rated as ‘Critical’ existed as of 1 January 2016; notes, however, that the two recommendations regarding human resources management (rated as ‘Very Important’) and IT project management (rated as ‘Important’) were not implemented in line with the deadlines set out in the action plan; acknowledges that implementation was delayed due to the pending adoption of the new implementing rules relating to the engagement of temporary and contract staff, as well as due to the Agency's decision to implement the ICT governance prior to the implementation of its ICT strategy in order for the implementation to be consistent and sustainable;

Other comments

22.

Recalls that in previous years the high and constantly increasing number of grant agreements, as well as the magnitude of related expenditure to be verified by the Agency, indicated that a more efficient and cost-effective alternative funding mechanism could be used to finance the Agency's operational activities; acknowledges that the Agency's new founding regulation has removed the term ‘grants’ as the contractual instrument for the operational activities between the Agency and the institutions of the Members States; hopes that this modification will allow the Agency to streamline the financial management of its operational activities; calls on the Agency to inform the discharge authority on further developments regarding this issue;

23.

Welcomes the contribution of the Agency to saving more than 250 000 people at sea in 2015; welcomes the increase in the Agency's search and rescue capacity following the tragic events of spring 2015;

24.

Calls for a greater exchange of information between Frontex, Union justice and home affairs agencies and the Member States, in full compliance with data protection rules and, in particular, the principle of purpose limitation, in order to improve the effectiveness of Frontex grant-funded joint operations; regrets that the actual impact of joint operations is difficult to assess;

25.

Notes that, according to the Court's report, the majority of Frontex operational programmes lack quantitative objectives and specific target values for the joint operations; notes with concern that this, together with insufficient documentation from cooperating countries, might hamper the ex post evaluation of the effectiveness of joint operations in the long term; invites Frontex to improve its strategic programme planning, to set relevant strategic objectives for its grant activities and to establish an effective result-oriented monitoring and reporting system with relevant and measurable key performance indicators;

26.

Notes that States participating in border operations declared the costs incurred on the basis of cost claim sheets which comprise of fixed expenses (depreciation and maintenance), variable expenses (mostly fuel) and mission expenses (mostly allowances and other crew expenses); notes moreover that the costs declared were based on real values and followed national standards leading to divergent approaches among participating Member States which creates a burdensome system for all parties involved; encourages the Agency to use simplified cost options whenever appropriate to avoid such inefficiencies;

27.

Recalls that, in line with Article 57(2) of Regulation (EU) 2016/1624, the Agency's headquarters agreement was to be concluded after obtaining the approval of the Agency's management board and not later than 7 April 2017; notes with satisfaction that on 23 January 2017 the Agency and the Polish Government initialled the draft headquarters agreement; notes moreover that the agreement was to be presented to the Agency's management board in February 2017, which should, provided it is adopted, authorise the Agency's director to sign the agreement with the Polish Government and pave the way for the subsequent ratification by the Polish Parliament;

28.

Notes with concern a significant gender imbalance of 93 %/7 % in the Agency's management board; notes also that both members of the Agency's senior management team are of the same gender;

29.

Recalls that the Agency should provide its Fundamental Rights Officer with adequate resources and staff for setting up a complaint mechanism and for further developing and implementing the Agency's strategy to monitor and ensure the protection of fundamental rights;

30.

Welcomes the support provided to national authorities in hotspot areas in relation to the identification and registration of migrants, return-related activities and Union internal security; welcomes the signature of an operational cooperation agreement with Europol to deter cross-border crime and migrant smuggling; calls for further and more effective cooperation with Europol and other agencies in the area of justice and home affairs.

31.

Refers, for other observations of a cross-cutting nature accompanying its decision on discharge, to its resolution of 27 April 2017 (1) on the performance, financial management and control of the agencies.

(1) Texts adopted, P8_TA(2017)0155 (see page 372 of this Official Journal).