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having regard to the final annual accounts of the European Railway Agency for the financial year 2010,

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having regard to the Court of Auditors’ report on the annual accounts of the European Railway Agency for the financial year 2010, together with the Agency’s replies (1),

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having regard to the Council’s recommendation of 21 February 2012 (06083/2012 – C7-0051/2012),

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having regard to Article 319 of the Treaty on the Functioning of the European Union,

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having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (2), and in particular Article 185 thereof,

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having regard to Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 April 2004 establishing a European Railway Agency (3), and in particular Article 39 thereof,

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having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (4), and in particular Article 94 thereof,

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having regard to Rule 77 of, and Annex VI to, its Rules of Procedure,

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having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Transport and Tourism (A7-0118/2012),

A.

whereas the Court of Auditors stated that it has obtained reasonable assurances that the annual accounts for the financial year 2010 are reliable and that the underlying transactions are legal and regular,

B.

whereas on 10 May 2011 Parliament granted the Executive Director of the European Railway Agency discharge for implementation of the Agency’s budget for the financial year 2009 (5), and in its resolution accompanying the discharge, inter alia:

C.

whereas the overall budget for the Agency for the year 2010 was EUR 24 147 240, which is an increase of 14,9 % compared to 2009; whereas the initial contribution of the European Union to the budget of the Agency for 2010 was EUR 23 260 000 compared to EUR 16 060 000 in 2009, which represents an increase of 44,83 %,

1.

Recalls that the initial Union contribution to the Agency for 2010 amounted to EUR 23 260 000; notes however that EUR 214 000, coming from the recovery of surplus, was added to it which, as a result, makes a total Union contribution of EUR 23 474 000 for 2010;

2.

Notes from the Agency’s Annual Activity Report (AAR) that 99 % of appropriations were committed and 77 % have been used for payments; notes in particular that:

appreciates the fact that the Agency provides information on the use of the appropriations carried forward from 2009 to 2010;

3.

Takes the view that it is extremely important to optimise the use of budgetary resources at a time of financial crisis and urges the Commission and the Agency to analyse and establish the real budgetary requirements in order for the Agency to be able to carry out all the tasks assigned to it;

4.

Acknowledges from the Agency’s Report on Budgetary and Financial Management Information (RBFMI) that in December 2009 the Agency realised that Chapter 11 (staff expenditure) was not correctly forecasted for the 2010 budget since Title I was underestimated by approximately EUR 1 500 000; understands from the Agency that the situation was due to:

5.

Takes note of the Agency’s decision to transfer an amount of EUR 500 000 from Title II to Title I and to transfer an amount of EUR 500 000 from Title III to Title I; notes from the Agency that the decision has been approved by the Administrative Board and the Commission;

6.

Notes moreover that to cover the remaining gap the Agency implemented complementary measures to reduce expenditure under Title I; notes from the Agency that these measures allowed for an extra saving of less than EUR 300 000; takes note that this amount has been transferred back to Title II;

7.

Regrets that the errors in budgetary forecasts resulted in the cancellation or delay of certain investments; urges the Agency to inform immediately the discharge authority of the measures implemented in order to allow for better expenditure forecasts;

8.

Is concerned that the situation was not reported by the Court of Auditors in its report on the annual accounts of the Agency for the financial year 2010; calls on the Court of Auditors to explain this omission to the discharge authority;

9.

Acknowledges from the Court of Auditors that the appropriations carried forward to 2011 amounted to EUR 5 500 000, of which EUR 4 300 000 (78 %) are related to goods and services that were to be provided in 2011;

10.

Recalls that the Agency already carried over a substantial amount of appropriations in the financial years 2008 and 2009 to the financial year 2010; considers that these serious breaches of the budgetary principle of annuality can no longer be accepted in the future and that discharge should be refused on the next occasion, in the event that there is a further breach of that budgetary principle; calls on the Agency to take the measures required to remedy the situation without delay;

11.

Is of the opinion that the Agency did not adequately address the problem of appropriations being carried forward from one year to the next; recalls the importance of the budgetary principle of annuality; calls on the Agency to inform the discharge authority about actions taken to improve the annual budget implementation and to decrease the carry-overs of budget appropriations;

12.

Notes nevertheless the Agency’s reply which argues that it is analysing the possibility to conclude framework contracts for studies much sooner after the adoption of the budget; notes also that the Agency committed, for the years 2011 and 2012, to review its budget forecasts to better align them to its real needs and to optimise the use of its budgetary resources;

13.

Calls on the Agency to inform the discharge authority when the report to be attached to each year’s budget on the unspent appropriations carried over from previous years, will be ready; reminds the Agency that this request was already made during the previous discharge procedure;

14.

Notes that in the Annual Work Programme (AWP) the Agency, in order to facilitate annual procurement planning, will introduce ABAC Contract to support the decentralised contract management;

15.

Observes from the Agency’s AAR that 21 procurement procedures (negotiated and opened) were launched in 2010 and 12 were completed in 2010;

16.

Observes from the Agency’s AAR that the Agency updated its Manual for Financial procedures in line with the modules of ABAC Workflow and ABAC assets;

17.

Welcomes the Agency’s implementation, as of 1 September 2010, of a centralised system for registration of incoming invoices; stresses that this measure is necessary to ensure the timely recording of all invoices and contributes to avoiding delays in processing payments;

18.

Notes from the Agency’s RBFMI that on 31 December 2010 the Agency employed 133 temporary agents (TAs) and 9 contract agents (CAs); takes also note that recruitment procedures are still ongoing in order to reach the 139 TAs foreseen in the 2010 establishment plan and subsequently the 144 TAs foreseen in 2011;

19.

Notes from the RBFMI that the Agency included 6 seconded national experts in 2010;

20.

Acknowledges from the Agency that it has developed a consolidated manual on different rules, instructions and guidelines governing staff recruitment; stresses that it is important to process and manage individual recruitment without compromising the principle of equal treatment of candidates;

21.

Calls on the Agency to include in its AWP clearer information on the global budgetary envelope reserved for procurements and the indicative number and types of contracts envisaged; notes in fact that Article 60(3) of the Agency’s Financial Regulation requires so when stating that ‘the work programme of the Agency shall be equivalent to a financing decision for the activities it covers, provided that they are clearly identified and the underlying criteria are spelled out precisely’;

22.

Urges moreover the Agency to create a Multi-Annual Plan translating long-term objectives into multi-annual tasks and associated Key Performance Indicators; underlines that this would better provide stakeholders with information on the objectives/activities, strategic priorities and resource allocation;

23.

Notes from the AAR that the Agency’s business planning and budget structure was reviewed in 2010 with a view to introducing activity based planning from 2012;

24.

Considers that using two locations (Lille and Valenciennes) for carrying out its activities exposes the Agency to additional costs; notes, also, that this observation has been made since 2006 and that no action has been taken by the Council to change the Decision 2004/97/EC, Euratom (6) obliging the Agency to have a double seat;

25.

Acknowledges from the Agency that the Internal Audit Service (IAS) carried out an audit on the planning and budgeting processes in 2010 in order to provide reasonable assurance on the internal control system of the Agency as regards its planning and budgeting processes; notes that the IAS recommendations concern the strategic planning, the coherence and accuracy of the draft estimate revenue and expenditure, the AWP as financing decision and mid-term IT strategy; calls therefore on the Agency to implement the necessary measures to fulfil these IAS recommendations;

26.

Calls on the Agency to implement the IAS recommendations related to the audit on Human Resources (HR) management undertaken by the IAS in 2009; notes that the implementation of three of these recommendations (on HR management in annual planning, on compliance with rules and principles of transparency in staff appraisal, on the disclosure of an exception to the staff regulation) have experienced a delay of 6-12 months; calls on the Agency to inform the discharge authority about the progress of implementation of these IAS recommendations;

27.

Welcomes the Agency’s initiative of having set up at the end of 2007 an Internal Audit Capability that is dedicated to providing support and advice to its Executive Director and management on internal control, risk assessment and internal audit;

28.

Draws attention to its recommendations from previous discharge reports, as set out in the Annex to this resolution;

29.

Draws the Agency’s attention to the Resolution of the European Parliament of 10 May 2011 on the 2009 discharge: performance, financial management and control of EU agencies (7); calls on the Agency to comply with it;

30.

Refers, in respect of the other observations accompanying its Decision on discharge, which are of a horizontal nature, to its resolution of 10 May 2012 (8) on the performance, financial management and control of the agencies.