10.1.2013   

EN

Official Journal of the European Union

C 6/1

1.

The Artemis Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of 10 years.

2.

The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key technologies for Embedded Computing Systems across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2).

3.

The Founding Members of the Artemis Joint Undertaking are the European Union represented by the Commission, the Member States Austria, Belgium, Denmark, Estonia, France, Finland, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Portugal, Romania, Slovenia, Spain, Sweden, the United Kingdom, and Artemisia, an association representing companies and other research organisations active in the field of Embedded Computing Systems in Europe. In 2009, Cyprus, the Czech Republic, Latvia and Norway also became members of the Joint Undertaking.

4.

The maximum EU contribution to the Artemis Joint Undertaking to cover running costs and research activities is 420 million euro to be paid from the budget of the Seventh Framework Programme (3). The Artemisia association is to make a maximum contribution of 30 million euro to the running costs. Artemis Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects.

5.

The Joint Undertaking started to work autonomously on 26 October 2009.

6.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and 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 (4) of the Artemis Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) 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 (7).

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 (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) 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.

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 (11) 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 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 (12) of the Joint Undertaking was adopted by a Governing Board decision on 25 November 2010 and is a key control (13) for assessing the legality and regularity of the underlying transactions. The payments made in 2011 relating to certificates of acceptance of costs issued by the National Funding Authorities of the Member States (NFAs) amounted to 4,8 million euro, which represents 32 % of total operational payments. The implementation of the ex post audit strategy started in 2011.

16.

The audit of project cost claims has been delegated to the NFAs of the Member States. The administrative agreements signed with the NFAs do not include the practical arrangements for the ex post audits. By the end of the audit (September 2012), Artemis had not received sufficient information relating to the audit strategies of eight of the NFAs (14) and was not in a position to assess whether the ex-post audit strategy provides sufficient assurance with respect to the legality and regularity of the underlying transactions (15).

17.

The information available on the implementation of the Joint Undertaking’s ex post audit strategy is not sufficient to conclude whether this key control is functioning effectively.

18.

In the Court’s opinion, except for the possible effects of the matter described in the basis for a qualified opinion in paragraphs 15 to 17, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2011 are, in all material respects, legal and regular.

19.

The comments which follow in paragraphs 20 to 35 do not call the Court’s opinions into question.

20.

Contrary to Artemis's financial rules (16), the 2011 budget of the Joint Undertaking does not reflect differentiated payment appropriations for operational expenditure.

21.

The 2011 budget was adopted on 25 November 2010 and included operational appropriations amounting to 46,6 million euro. On 17 December 2011 an amending budget was adopted reducing operational appropriations to 18,6 million euro. While the utilisation rate for operational commitment appropriations was 100 % (as a result of the reduction of the operational appropriations to 18,6 million euro), the rate for payment appropriations was only 51 %.

22.

According to the programme manager, the estimates for budget implementation for the 2008, 2009 and 2010 call for proposals at the end of the year amounted to 86 %, 53 % and 18 % respectively. However, the actual payments made under the 2008 call were only 50 %, 31 % for the 2009 call and no payments had been made under the 2010 call. According to the Joint Undertaking, the relatively low implementation rate for operational payment appropriations, is the consequence of the delays at the level of the Member States in signing the national grant agreements.

23.

Contrary to the Statutes of the Artemis Joint Undertaking (17), Greece is using EU structural funds to cover its national contributions to the Greek beneficiaries of the Artemis projects (18) instead of providing national funding. The Joint Undertaking accepted the continuation of Greek participation in Artemis projects but no funding is being provided by the Joint Undertaking to the Greek beneficiaries as co-financing with another source of EU funding is not allowed (19).

24.

The Joint Undertaking is using non-automatic carryover of payment appropriations to the next financial year, but without a decision of the Governing Board as required by Article 10(1) of the financial rules (20). Moreover, no distinction is made between payment appropriations carried over from previous years and payment appropriations of the current year.

25.

The Council Regulation setting up the Artemis Joint Undertaking envisaged a maximum total budget of 420 million euro to cover operational expenditure. The actual implementation and the foreseen value of the calls for proposals represent 244 million euro or 58 % of the total budget.

26.

During 2011 the Joint Undertaking intensified its efforts to establish and implement effective financial, accounting and management control procedures. However further work is needed, in particular regarding the internal control standards (21) and the financial verification of cost claims (22).

27.

The Accounting Officer validated the financial and accounting systems used, but has not yet validated the underlying business processes which provide financial information, in particular, the one providing financial information about the validation and payment of the cost claims received from the national authorities.

28.

Article 6(2) of the Regulation setting up Artemis stipulates that the Joint Undertaking shall have an internal audit capability. However, at the end of 2011, this important element of the internal control system had not yet been set up.

29.

In 2011 the Commission’s Internal Audit Service carried out a risk assessment exercise and the strategic audit plan for 2012-2014 was presented to the Governing Board for adoption on 25 January 2012.

30.

The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 25 November 2010. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (23) referring to the powers of the Commission’s Internal Auditor.

31.

According to Articles 19(4) of the Statutes of the Joint Undertaking and Article 40 of its Financial Rules, the Executive Director is required to draw up an annual activity report. The annual activity report shall indicate the results of the operations by reference to the objectives set, the risks associated with these operations, the use made of the resources provided and the efficiency and effectiveness of the internal control system. It shall also confirm that the information contained in the report presents a true and fair view except as otherwise specified in any reservations related to defined areas of revenue and expenditure.

32.

Although the annual activity report provides information on the results of the operations of the Joint Undertaking, it does not include an assessment of the efficiency and effectiveness of the internal control system. The annual activity report contains the following weaknesses:

33.

During 2011 the Joint Undertaking set up a Business Continuity Plan and made progress on the formalisation of the IT security policies. Further work is required to finalise the Disaster Recovery Plan.

34.

Contrary to the Artemis Joint Undertaking's financial rules (24), the National Funding Authorities have not yet declared any bank interest generated on pre-financing payments.

35.

The Host State Agreement (25) between the Joint Undertaking and the Belgian authorities concerning office accommodation, privileges and immunities and other support to be provided was signed on 2 February 2012.

10.1.2013   

EN

Official Journal of the European Union

C 6/9

1.

The Clean Sky Joint Undertaking, located in Brussels, was set up in December 2007 (1) for a period of ten years.

2.

The objective of the Clean Sky Joint Undertaking is to accelerate the development, validation and demonstration of clean air-transport technologies in the EU for earliest possible deployment (2). The research activities coordinated by the Joint Undertaking are divided into six technological areas or ‘Integrated Technology Demonstrators’ (ITDs).

3.

The Founding Members of the Joint Undertaking are the European Union, represented by the Commission, and industrial partners as the leaders of the ITDs, together with the associate members of the ITDs.

4.

The maximum EU contribution to the Clean Sky Joint Undertaking to cover running costs and research activities is 800 million euro to be paid from the budget of the Seventh Framework Programme (3). Other Members of the Joint Undertaking are to contribute resources at least equal to the EU contribution, including in-kind contributions.

5.

The Joint Undertaking started working 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 Undertaking and 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 (4) of the Clean Sky Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) 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 (7).

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 (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) 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.

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 (11) 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 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 provision of its financial rules.

15.

The ex-post audit strategy of the Joint Undertaking was adopted by a Governing Board decision on 17 December 2010 and is a key control for assessing the legality and regularity of the underlying transactions (12). The ex-post audits completed as of September 2012 covered 44,3 million euro (18,8 % of all cost claims received by the Joint Undertaking in 2008, 2009 and 2010 (13). The error rate resulting from these ex-post audits was 6,16 % (14).

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 financial year ended 31 December 2011 are, in all material respects, legal and regular.

17.

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

18.

The 2011 final amending budget (15) included commitment appropriations of 175 million euro and payment appropriations of 159,8 million euro. The utilisation rate for commitment appropriations was 94 %, while the rate of payment appropriations was 64 %. The payment appropriation rate reflects delays in the implementation of the Joint Undertaking’s activities. There are significant delays between the publication of the calls for proposals and the signature of the grant agreements (16). The low implementation of the budget is also reflected in the cash balance, which stood at 51 million euro at the end of the year (32 % of the available payment appropriations in 2011) (17).

19.

The Joint Undertaking, contrary to its financial rules, carried over 68 million euro of payment appropriations to 2012 without a decision by the Governing Board (18).

20.

The Joint Undertaking experienced a significant delay in receiving the cost claims from Grant Agreements with Members for 2011. Due to the delay, the validation of a large number of claims could not be completed for the 2011 Final Accounts. The related in-kind contributions (52 million euro) were not approved by the Governing Board in due time and, as a consequence, could not be registered under net assets and had to be reflected under liabilities (‘contributions to be validated’).The Joint Undertaking therefore reported negative net assets of 18,5 million euro. The Final Accounts duly reflect this transitional situation that does not indicate any risk of solvency for the Joint Undertaking.

21.

Despite the progress made during 2011, the Joint Undertaking has not yet fully established reliable internal control and financial information systems. In particular, further work is needed on the ex-ante control procedures applied for the validation of cost claims.

22.

In 2011 the Joint Undertaking had not yet implemented the new tool (19) to manage the data relating to the cost claims submitted by the members and beneficiaries.

23.

The Court examined the ex-ante control procedures applied to cost claims submitted under three grant agreements with Clean Sky Members (20). The following weaknesses were noted:

24.

The Accounting Officer completed in March 2012 the validation exercise of the underlying business processes as required by the Joint Undertaking's financial rules (23). A number of recommendations were made in the Accounting Officer’s validation report, in particular the need to improve the system for the validation of cost claims and the implementation of a tool to properly report to management, on budgetary and accounting matters.

25.

During 2011, and as a result of resource constraints within the organisation, the internal auditor had to work on the core processes of the Joint Undertaking, including the establishment of the 2010 and 2011 accounts and the validation of cost claims received from members.

26.

In 2011 the Commission’s Internal Audit Service carried out a risk assessment exercise. Based on the results of the risk assessment, the strategic audit plan for 2012-2014 was presented to the Governing Board for adoption on 14 December 2011.

27.

The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 31 March 2011. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (24) referring to the powers of the Commission’s internal auditor.

28.

The procedure for issuing recovery orders relating to the Joint Undertaking's running costs was not properly applied. The request to the members to pay their 2011 contributions was not accompanied by the cash-flow forecast as required under the funding agreement.

29.

As at the end of 2011, the Joint Undertaking had not yet completed the internal procedures to be used for the supervision of the application of the provisions regarding the protection, use and dissemination of research results (25).

30.

The Court in its 2011 Opinion on the Joint Undertaking’s financial rules identified a number of areas which needed to be amended (26). The financial rules have not been amended to reflect the matters raised in the Court’s Opinion.

31.

During 2011 the JU set up a Business Continuity Plan and made progress on the formalisation of the IT security policies. Essential elements (27) of a Disaster Recovery Plan have been defined during 2011, but work is needed to finalise and approve it.

32.

The Host State Agreement (28) between the Joint Undertaking and the Belgian authorities concerning office accommodation, privileges and immunities and other support was signed on 2 February 2012.

—

‘the operational verifying agent shall verify that the operational aspects (technical and financial) of the file are in compliance with the agreed parameters,

—

the verifying agent (head of administration) shall verify the compliance of the operational aspects with the existing rules and the overall regularity of the operation,

—

the executive director shall perform the overall financial and operational check of the entire file.’

10.1.2013   

EN

Official Journal of the European Union

C 6/18

1.

The European Joint Undertaking for the implementation of the Joint Technology Initiative on Nanoelectronics (ENIAC Joint Undertaking), located in Brussels, was set up in December 2007 (1) for a period of 10 years.

2.

The main objective of the Joint Undertaking is to define and implement a ‘Research Agenda’ for the development of key competences for nanoelectronics across different application areas in order to strengthen European competitiveness and sustainability, and allow the emergence of new markets and societal applications (2).

3.

The Founding Members of the Joint Undertaking are the European Union represented by the Commission, the Member States Belgium, Estonia, France, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Portugal, Spain, Sweden and the United Kingdom, and the Association for European Nanoelectronics Activities (AENEAS). Other Member States and associated countries, as well as any other country or legal entity capable of making a substantial financial contribution to the achievement of the Joint Undertaking’s objectives, may become members of the ENIAC Joint Undertaking.

4.

The maximum EU contribution to the ENIAC Joint Undertaking to cover running costs and research activities is 450 million euro to be paid from the budget of the Seventh Framework Programme (3). AENEAS is to make a maximum contribution of 30 million euro to the running costs of the Joint Undertaking. ENIAC Member States are to make in-kind contributions to the running costs (by facilitating the implementation of projects), and to provide financial contributions of at least 1,8 times the EU contribution. In-kind contributions are also to be provided by research organisations participating in projects. The organisations participating in the research projects must make in-kind contributions at least equal to the contribution of the Commission and the Member States.

5.

The Joint Undertaking was granted its financial autonomy on 26 July 2010.

6.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and 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 (4) of the ENIAC Joint Undertaking, which comprise the ‘financial statements’ (5) and the ‘reports on the implementation of the budget’ (6) 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 (7).

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 (8). The Director is responsible for putting in place (9) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (10) 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.

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 (11) 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 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 (12) of the Joint Undertaking was adopted by a Governing Board decision on 18 November 2010 and is a key control (13) for assessing the legality and regularity of the underlying transactions. The payments made in 2011 relating to certificates of acceptance of costs issued by the National Funding Authorities (NFAs) of the Member States amounted to 6,8 million euro, which represents 45 % of the total operational payments. The implementation of the ex post audit strategy started in 2011.

16.

The audit of project cost claims has been delegated to the NFAs of the Member States. The administrative agreements signed with the NFAs do not include the practical arrangements for the ex post audits. By the end of the audit (September 2012), the Joint Undertaking had not received sufficient information relating to the audit strategies of the NFAs (14) and was not in a position to assess whether the ex post audit strategy provides sufficient assurance with respect to the legality and regularity of the underlying transactions (15). Furthermore, no ex post audits had been carried out by the NFAs on the grants paid up to the end of 2011.

17.

The information available on the implementation of the Joint Undertaking’s ex post audit strategy is not sufficient to conclude whether this key control is functioning effectively.

18.

In the Court’s opinion, except for the possible effects of the matter described in the basis for a qualified opinion in paragraphs 15 to 17, the transactions underlying the annual accounts of the Joint Undertaking for the financial year ended 31 December 2011 are, in all material respects, legal and regular.

19.

The comments which follow in paragraphs 20 to 33 do not call the Court’s opinions into question.

20.

The 2011 final budget included commitment and payment appropriations amounting to 66 million euro and 35 million euro respectively. The utilisation rates for the available commitment and payment appropriations were 97 % and 48 % (16) respectively. Out of the 63,6 million euro commitment appropriations available for operational activities, 20,1 million euro were implemented as a global commitment for the first 2011 call for proposals and 42,2 million euro were implemented as a global commitment for the second 2011 call for proposals.

21.

A lack of adequate procedures and control weaknesses were detected in the decommitment of unused appropriations. Appropriations which should have been implemented by the end of 2010 and appropriations which should have been implemented by the end of 2011 were decommitted in January 2012. The unused global commitment of 2,8 million euro on the operational activities budget line for 2010 with a final date of implementation of 31 December 2011 was not decommitted.

22.

The calls for proposals organised in 2008, 2009 and 2010 resulted in signed grant agreements totalling 107,9 million euro, which represent 25 % of the maximum EU contribution to the Joint Undertaking for research activities (17). In 2011, two calls for proposals were launched amounting to 62,3 million euro, but the signature of the grant agreements was ongoing. In 2012, two more calls for proposals were launched amounting to 84,5 million euro. During 2013, calls for proposals with a budget of 185,3 million euro (42 %) would have to be launched in order to fully use the available EU contribution of 440 million euro.

23.

The Joint Undertaking has not yet fully implemented effective and efficient internal controls and financial information systems. This resulted in significant errors and delays in the financial reporting that were corrected before the adoption of the final accounts.

24.

The Accounting Officer of the Joint Undertaking validated the financial and accounting systems (ABAC and SAP) on 20 December 2010. However, the underlying business processes which provide financial information, in particular the one providing financial information on the validation and payment of the cost claims received from the NFAs, were not validated during 2011.

25.

Article 6(2) of the Council Regulation setting up ENIAC stipulates that the Joint Undertaking shall have an internal audit capability. However, at the end of 2011, this important element of the internal control system had not yet been set up.

26.

In 2011, the Commission’s Internal Audit Service carried out a risk assessment exercise. Based on the results of the risk assessment, the strategic audit plan for 2012-2014 was presented to the Governing Board for adoption on 22 November 2011.

27.

The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 18 November 2010. However, the financial rules of the Joint Undertaking have not yet been amended to include the provision of the Framework Regulation (18) referring to the powers of the Commission’s internal auditor.

28.

The statutes of the ENIAC Joint Undertaking stipulate that the financial contributions from ENIAC Member States are to amount in total to at least 1,8 times (19) the EU’s financial contribution, while the Joint Undertaking’s grants can reach a maximum of 16,7 % of the total eligible costs of the projects. For the first five calls for proposals, the financial contribution from ENIAC Member States amounted to 1,55 times the EU’s financial contribution.

29.

Contrary to the Statutes of ENIAC Joint Undertaking (20), Greece is using EU structural funds to cover its national contributions to the Greek beneficiaries of the ENIAC projects (21) instead of providing national funding. The Joint Undertaking accepted the continuation of the Greek participation in ENIAC projects but no funding is being provided by the Joint Undertaking to the Greek beneficiaries, as co-financing with another source of EU funding is not allowed (22).

30.

According to Articles 19(4) of the Statutes of the Joint Undertaking and Article 40 of its Financial Rules, the Executive Director is required to draw up an annual activity report. The annual activity report shall indicate the results of the operations by reference to the objectives set, the risks associated with these operations, the use made of the resources provided and the efficiency and effectiveness of the internal control system. It shall also confirm that the information contained in the report presents a true and fair view except as otherwise specified in any reservations related to defined areas of revenue and expenditure.

31.

The annual activity report does not include an assessment of the efficiency and effectiveness of the internal control system. The annual activity report includes the following weaknesses:

32.

During 2011 the Joint Undertaking set up a Business Continuity Plan and made progress on the formalisation of the IT security policies. Further work is required to finalise the Disaster Recovery Plan.

33.

The Host State Agreement (23) between the Joint Undertaking and the Belgian authorities concerning office accommodation, privileges and immunities and other support to be provided was signed on 2 February 2012.

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.

10.1.2013   

EN

Official Journal of the European Union

C 6/36

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 2011: Switzerland).

4.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and 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.

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

6.

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 (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 Joint Undertaking’s annual accounts 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 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.

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 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 2011 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 2011 are, in all material respects, legal and regular.

14.

The comments which follow in paragraphs 15 to 32 do not call the Court’s opinions into question.

15.

The utilisation rates for the available commitment and payment appropriations were 99,7 % and 85,7 % respectively. Out of the 611 million euro of commitment appropriations available for operational activities, 42 % were implemented through direct individual commitments while the remaining 58 % was implemented through global commitments.

16.

The Court of Auditors has previously reported that the Joint Undertaking’s internal control systems had not been fully established and implemented as required by its Financial Regulation (13). On 31 May 2010 the Joint Undertaking’s Internal Auditor issued a report 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 together with a proposal to change the organisational structure and reinforce the financial circuits. Although significant progress has been made (14), a number of actions need to be implemented:

18.

As pointed out in its 2010 report (17), the Joint Undertaking needs to enhance its efforts to increase competition. The number of offers received for the operational procurement procedures signed in 2011 was still low (18) and amounted to two on average; for grants the average number of proposals received was only one per call.

19.

In one case the decision to cancel an open procedure and to use a negociated procedure was not duly justified. In another case, the Joint Undertaking decided to negotiate with two companies which submitted offers under the open procedure (although one of them was not technically compliant). In another case both the choice of the negotiated procedure and the quantities and price contracted were not duly justified.

20.

The Court’s audit has confirmed the findings of an internal audit carried out in 2011 in the area of procurement, notably:

21.

The audit also revealed that the ex ante control procedures applied to payments made under contracts and grant agreements are not sufficiently documented (20).

22.

The Joint Undergtaking has a system to perform audits (21) at the level of contractors with the aim of checking compliance with the quality assurance requirements (22). However, the scope of these audits does not cover the financial aspects of the implementation of the contracts.

23.

During 2011 the Joint Undertaking started ex post controls to asses the legality and regularity of the implementation of grants awarded. Despite the progress made (23), the Joint Undertaking lacks an overall ex post control strategy. Such a strategy should cover the implementation of grant contracts and procurement contracts.

24.

On 28 March 2012 the Governing Board adopted the Joint Undertaking’s policy on intellectual property rights and dissemination of information. However, detailed rules for its implementation had not been drawn-up at the time of the audit (April 2012) as required under the Statutes (24).

25.

The Governing Board has not yet adopted the industrial policy required under the Statutes (25).

26.

Payments of the 2011 contributions by 12 members were subject to delays.

27.

The mission charter of the Commission’s Internal Audit Service was adopted by the Governing Board on 25 November 2011 together with a coordinated strategic audit plan for 2012-2014. The Joint Undertaking's Financial Regulation has been amended accordingly to introduce the provisions of the Framework Regulation (26) referring to the powers of the Commission’s internal auditor.

28.

On 9 October 2008 the Court issued Opinion No 4/2008 on Fusion for Energy's Financial Regulation. This opinion contained 50 recommendations. At its meeting of 1 June 2011 the Joint Undertaking’s Governing Board decided to broadly accept the Court of Auditors’ observations (37 recommendations were fully accepted, 11 accepted with comments and only two rejected), amending its Financial Regulation accordingly (27).

29.

However, the Court considers that certain provisions in the Joint Undertaking's implementing rules (28) depart from the implementing rules of the EU General Financial Regulation without sufficient justification.

30.

In July 2010 (29). the Council agreed the revised budget estimate of the Joint Undertaking's contribution for the construction phase amounting to 6,6 billion euro (2008 value), thus doubling the initial estimate. As reported by the internal auditor (30), the Joint Undertaking does not yet have a tool to regularly monitor the validity of the estimates and report on potential deviations.

31.

On 1 December 2011 an agreement was reached by the Council, the European Parliament and the Commission on the financing of the 1 300 million euro of additional costs for the ITER project for 2012-2013 (31).

32.

According to the Host State Agreement signed with the Kingdom of Spain on 28 June 2007, the permanent premises should have been made available to the Joint Undertaking by June 2010. However, at the time of the audit (April 2012) this had not occurred.

10.1.2013   

EN

Official Journal of the European Union

C 6/46

1.

The SESAR Joint Undertaking was set up in February 2007 (1), located in Brussels, in order to manage the activities of the SESAR (Single European Sky Air Traffic Management Research) programme.

2.

The SESAR programme aims to modernise Air Traffic Management (ATM) in Europe and is divided into three phases:

3.

The Joint Undertaking is designed as a public-private partnership. The founding members are the European Union represented by the European Commission, and Eurocontrol represented by its Agency. Following a call for expressions of interest, fifteen public and private enterprises from the air navigation industry are members of the Joint Undertaking. These include air navigation service providers, ground and aerospace manufacturing industry, aircraft manufacturers, airport authorities and airborne equipment manufacturers.

4.

The budget for the development phase of the SESAR programme is 2,1 billion euro, to be provided in equal parts by the EU, by Eurocontrol and by the participating public and private partners. The EU contribution is funded from the Seventh Research Framework Programme and the Trans-European Networks – Transport programme. Around 90 % of the funding from Eurocontrol and the other stakeholders is in the form of in-kind contributions.

5.

The SESAR JU started to work autonomously on 10 August 2007.

6.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and 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 of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (2) of the SESAR Joint Undertaking, which comprise the ‘financial statements’ (3) and the ‘reports on implementation of the budget’ (4) for the financial year ended 31 December 2011 and the legality and regularity of the transactions underlying those accounts.

8.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules (5) of the Joint Undertaking, under his own responsibility and within the limits of the authorised appropriations (6). The Director is responsible for putting in place the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (7) 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.

9.

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.

10.

The Court conducted its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require that the Court plans and performs the audit to obtain reasonable assurance as to whether the accounts of the Joint Undertaking are free from material misstatement and whether the transactions underlying them are legal and regular.

11.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and about the legality and the regularity of the transactions underlying them. The procedures are selected based on the auditor’s judgement, including an assessment of the risks of material misstatement of the accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In assessing those risks, the auditor considers internal controls relevant to the preparation and fair presentation of the accounts and supervisory and control systems implemented to ensure legality and regularity of underlying transactions, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made, as well as evaluating the overall presentation of the accounts.

12.

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

13.

In the Court’s opinion, the SESAR Joint Undertaking’s annual accounts present fairly, 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 Regulation and the Accounting Rules adopted by the Commission’s Accounting Officer (8).

14.

In the Court’s opinion, the transactions underlying the annual accounts of the SESAR Joint Undertaking for the financial year ended 31 December 2011 are legal and regular in all material respects.

15.

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

16.

The final 2011 budget adopted by the Administrative Board included commitment appropriations of 148 million euro and payment appropriations of 91,7 million euro. The utilisation rates for commitment and payment appropriations were 99,4 % and 82,4 % respectively.

17.

In 2011, the contributions from members (34 million euro) together with the outturn of the previous year (57 million euro) and other sources of revenue (0,2 million euro) amounted to 91,2 million euro, against payments of 75,6 million euro. This led to a positive budget outturn of 15,6 million euro and deposits in bank accounts at the end of the year totalling 15,3 million euro. This is at odds with the budgetary principle of equilibrium.

18.

The Court notes that a review of the Joint Undertaking’s business processes carried out by an independent external auditor in 2011 found the internal control systems to be operating effectively. In April 2012, the Accounting Officer formally validated the underlying business processes, in line with the Financial Rules of the Joint Undertaking.

19.

The Court previously observed that the Commission and the SESAR Joint Undertaking have taken action to clarify the respective operational roles of the Commission’s Internal Aduit Service (IAS) and of the Joint Undertaking’s internal auditing function (9).

20.

The Court notes that, in November 2011, the Administrative Board of the Joint Undertaking adopted a Coordinated IAS Strategic Audit Plan for the Joint Undertaking for the period 2012-2014.

21.

The deadline of 1 July 2011 for payment to the Joint Undertaking of the cash contributions for the year from its members was not respected. At the end of August 2011 there remained 17 outstanding recovery orders, totalling 3,7 million euro. One member had paid no annual contribution at all by the end of 2011.

10.1.2013   

EN

Official Journal of the European Union

C 6/56

1.

The Fuel Cells and Hydrogen Joint Undertaking (FCH Joint Undertaking) located in Brussels, was set up in May 2008 (1) for the period up to 31 December 2017.

2.

The objectives of the FCH Joint Undertaking include supporting research, technological development and demonstration activities in the Member States and countries associated with the Seventh Framework Programme (2) in a coordinated manner, together with industry and research organisations, in order to focus on developing market applications and hence facilitating additional industrial efforts towards a rapid deployment of fuel cells and hydrogen technologies (3).

3.

The Members of the Joint Undertaking are the European Union, represented by the Commission, the New Energy World Industry Grouping (NEW-IG) and the Research community (N.ERGHY).

4.

The maximum EU contribution to the FCH Joint Undertaking to cover running costs and research activities is 470 million euro financed from the budget of the Seventh Framework Programme, of which the proportion earmarked for running costs must not exceed 20 million euro. New-IG should contribute 50 % of the running costs and N.ERGHY should contribute 1/12 of the running costs and should contribute to operational costs through in-kind (4) contributions at least equal to the financial contribution of the Union.

5.

The Joint Undertaking was granted its financial autonomy on 15 November 2010.

6.

The audit approach taken by the Court comprises analytical audit procedures, testing of transactions at the level of the Joint Undertaking and 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 (5) of the Fuel Cells and Hydrogen Joint Undertaking, which comprise the ‘financial statements’ (6) and the ‘reports on the implementation of the budget’ (7) 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 (8).

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 (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.

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 (12) 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 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.

An ex-post audit strategy was adopted by the Governing Board in January 2011 and is a key control for assessing the legality and regularity of the underlying transactions (13). Only eight of twelve ex-post audits were completed as of September 2012 covering 4,8 million euro (27 % of all cost claims received by the FCH Joint Undertaking in 2011). Six of the audits did not present material errors but the other two detected significant errors (14), the larger of which (764 000 euro) has been corrected in the following year.

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 ended 31 December 2011 are, in all material respects, legal and regular.

17.

The comments which follow in paragraphs 18 to 27 do not call the Court’s opinions into question.

18.

The 2011 final budget included commitment and payment appropriations amounting to 117 million euro and 60 million euro respectively. The utilisation rates for the available commitment and payment appropriations were 99,8 % and 87,9 % respectively. An amount of 112 million euro representing commitment appropriations available for operational activities (Title III of the budget) was implemented through a global commitment relating to the 2011 call for proposals.

19.

The budgetary procedure outlined in the FCH Joint Undertaking’s financial rules (15) was not followed; the derogation granted by the Commission to enter cancelled appropriations in the estimates of revenue and expenses for the following three years was misinterpreted. The Joint Undertaking chose to use payment appropriations amounting to 3,3 million euro (16) (representing payment appropriations carried over from 2010 to 2011) even though 6,3 million euro in payment appropriations authorised for the current financial year were still available (17). As a consequence of the FCH Joint Undertaking’s interpretation of the budgetary procedure, the budgetary outturn of the year is incorrect, as 6,3 million euro (18) in payment appropriations carried over from 2011 to 2012 were not included in the calculation. Furthermore, the budgetary outturn account for 2010 does not reflect the 3,3 million euro in payment appropriations carried over from 2010 to 2011.

20.

Unused global commitments from 2010 amounting to 10,4 million euro and with a final date of implementation at 31 December 2011, were not decommitted by the end of 2011 but were decommited in January 2012.

21.

The calls for proposals organised in 2008, 2009 and 2010 resulted in signed grant agreements totalling 183,4 million euro (19), and in 2011 a fourth call for proposals was launched amounting to 111,6 million euro, which represents 41 % and 25 % respectively of the maximum EU contribution to the Joint Undertaking for research activities (20). The evaluation of the call was finalised in 2011 and the selected projects are currently in the negociation process. In January 2012 a fifth call for proposals was launched amounting to 79 million euro, a further 18 % of the maximum EU contribution. This shows satisfactory progress in budget implementation.

22.

At the end of 2011, the underlying business processes had been validated by the Accounting Officer (21) as required by the Joint Undertaking’s financial rules. In her report a number of weaknesses (22) were identified and will be followed up by the Accounting Officer in 2012.

23.

The method for evaluating the level of the in-kind contribution (23) has been finalised (24) and was jointly assessed by the Internal Audit Service (IAS) and the Internal Audit Capability (IAC) in April 2012 (25). The aggregated level of in-kind contributions validated by the Authorising Officer as at 8 February 2012 (the cut-off date used for the preparation of the 2011 Provisional Accounts) was 347,6 million euro. The assessment report concluded that this amount should be reduced by 0,93 million euro (26) euro (or 0,3 %).

24.

At the end of December 2011 the balance on the FCH Joint Undertaking’s bank account was 9,2 million euro (27). Between the months of August 2011 and December 2011 the FCH JU’s cash balance ranged between approximately 30 million euro and 60 million euro. The Joint Undertaking is expected to implement all the measures necessary to minimise the cash balances held on account to the levels that are required.

25.

During 2011, the Joint Undertaking set up a Business Continuity Plan and made progress on the formalisation of the IT security policies. The Business Continuity plan including a disaster recovery plan was adopted by the FCH JU on 12 June 2012.

26.

The financial rules of the Joint Undertaking have not yet been amended to include the provision referring to the powers of the Commission’s Internal Auditor (28).

27.

The Host State Agreement (29) between the Joint Undertaking and the Belgian authorities concerning office accommodation, privileges and immunities and other support to be provided was signed on 3 February 2012.