12.11.2012 EN Official Journal of the European Union C 344/1 IV (Notices) NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES COURT OF AUDITORS In accordance with the provisions of Article 287(1) and (4) of the TFEU and Articles 129 and 143 of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, as last amended by Regulation (EU, Euratom) No 1081/2010 of the European Parliament and of the Council, and Articles 139 and 156 of Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th European Development Fund the Court of Auditors of the European Union, at its meeting of 6 September 2012, adopted its ANNUAL REPORTS concerning the financial year 2011. The reports, together with the institutions' replies to the Court's observations, were transmitted to the authorities responsible for giving discharge and to the other institutions. The Members of the Court of Auditors are: Vítor Manuel da SILVA CALDEIRA (President), David BOSTOCK, Ioannis SARMAS, Igors LUDBORŽS, Jan KINŠT, Kersti KALJULAID, Karel PINXTEN, Ovidiu ISPIR, Nadejda SANDOLOVA, Michel CRETIN, Harald NOACK, Henri GRETHEN, Szabolcs FAZAKAS, Louis GALEA, Ladislav BALKO, Augustyn KUBIK, Milan Martin CVIKL, Rasa BUDBERGYTĖ, Lazaros S. LAZAROU, Gijs DE VRIES, Harald WÖGERBAUER, Hans Gustaf WESSBERG, Henrik OTBO, Pietro RUSSO, Ville ITÄLÄ, Kevin CARDIFF, Baudilio TOMÉ MUGURUZA. 12.11.2012 EN Official Journal of the European Union C 344/3 ANNUAL REPORT ON THE IMPLEMENTATION OF THE BUDGET (2012/C 344/01) 12.11.2012 EN Official Journal of the European Union C 344/5 TABLE OF CONTENTS Page General introduction . 7 Chapter 1 — The Statement of Assurance and supporting information . 9 Chapter 2 — Revenue . 51 Chapter 3 — Agriculture: market and direct support . 71 Chapter 4 — Rural development, environment, fisheries and health . 95 Chapter 5 — Regional policy; energy and transport . 119 Chapter 6 — Employment and social affairs . 151 Chapter 7 — External relations, aid and enlargement . 167 Chapter 8 — Research and other internal policies . 185 Chapter 9 — Administrative and other expenditure . 205 Chapter 10 — Getting results from the EU budget . 223 12.11.2012 EN Official Journal of the European Union C 344/7 GENERAL INTRODUCTION Chapter 2 deals with the revenue side of the EU budget; Chapters 3 to 9 with seven groups of policy areas within 0.1. The European Court of Auditors is the institution which spending from the EU budget is authorised and established by the Treaty to carry out the audit of European recorded. These groups of policy areas correspond broadly Union (EU) finances. As the EU’s external auditor it acts as the to the headings used in the 2007-2013 Financial independent guardian of the financial interests of the citizens of Framework, which sets out the EU’s broad multiannual the Union and contributes to improving EU financial spending plans; management. More information on the Court can be found in its annual activity report which, together with its special reports on EU spending programmes and revenue and its opinions on new or amended legislation, are available on its website: — Chapter 10 analyses the assessment of performance set out www.eca.europa.eu. in the annual activity reports presented by three of the Commission’s directors-general; identifies significant common themes in the special reports which the Court has adopted in 2011 and covers briefly the Commission’s 0.2. This is the Court’s 35th Annual Report on the imple­ evaluation report. mentation of the EU budget and covers the 2011 financial year. A separate Annual Report covers the European Development Funds. 0.6. The structure of the specific assessments has been altered. In this year’s Annual Report the single Chapter on agriculture and natural resources as presented in recent annual 0.3. The general budget of the EU is decided annually by the reports is replaced by two specific assessments and chapters: Council and the European Parliament. The Court’s annual report, together with its special reports, provides a basis for the discharge procedure, in which the European Parliament decides whether the Commission has satisfactorily carried out its responsibilities for implementing the budget. The Court — agriculture: market and direct support; and forwards its annual report to national parliaments at the same time as to the European Parliament and the Council. — rural development, environment, fisheries and health. 0.4. The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity 0.7. In addition, the single Chapter on cohesion, energy and of transactions (referred to in the report as ‘regularity of trans­ transport is replaced by two specific assessments and chapters: actions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance. — regional policy, energy and transport; and 0.5. The report is organised as follows: — employment and social affairs. — Chapter 1 contains the statement of assurance and a summary of the results of the Court’s audit on the reliability of accounts and on the regularity of transactions, as well as 0.8. The specific assessments are mainly based on: the results a summary report on the management of the budget in of the Court’s testing of the regularity of transactions; on an 2011. Annex 1.3 to Chapter 1 provides information from assessment of the effectiveness of the principal supervisory and the 2011 consolidated accounts. To a large extent, this control systems governing the revenue or expenditure involved; annex replaces the annex to previous annual reports on and on a review of the reliability of Commission management ‘Financial information on the general budget’. More representations. extensive 2011 financial information is presented in the published consolidated accounts and in the financial report prepared by the European Commission, both available on: 0.9. As in previous years, the Annual Report comments on the European Commission's ‘synthesis report’, in which the www.ec.europa.eu/budget/biblio/documents/2011; Commission accepts political responsibility for management of the EU budget: see paragraphs 1.24 to 1.30. The Commission has chosen to include in its synthesis report for 2011 critical comments about the possible impact on estimates of error of — Chapters 2 to 9 provide detailed audit findings in the form the Court's current audit methods and of their developments of ‘specific assessments’ of EU revenue and expenditure. being planned for 2012 and subsequent years. C 344/8 EN Official Journal of the European Union 12.11.2012 0.10. The Court regards these comments as inaccurate and 0.11. The Commission’s replies to the Court’s observations premature. Furthermore, the Court points out that such devel­ — or those of other EU institutions and bodies, where appro­ opments in its audit approach and methodology reflect evol­ priate — are presented within the document. The Court’s utions in its audit environment, including the way expen­ description of its findings and conclusions takes into account diture is managed by the auditees. As it always does, the the relevant replies of the auditee. However it is the Court’s Court will adequately explain any developments in its responsibility, as external auditor, to report its audit findings, methodology and their effects in a transparent manner at to draw conclusions from those findings, and thus to provide the appropriate time. an independent and impartial assessment of the reliability of the accounts as well as of the regularity of transactions. 12.11.2012 EN Official Journal of the European Union C 344/9 CHAPTER 1 The Statement of Assurance and supporting information TABLE OF CONTENTS Paragraph The Court’s Statement of Assurance provided to the European Parliament and the Council — Independent auditor’s report I-XI Introduction 1.1-1.5 Audit findings for the 2011 financial year 1.6-1.30 Reliability of accounts 1.6-1.8 Regularity of transactions 1.9-1.15 Summary of the DAS specific assessments 1.9-1.13 Comparison with previous year(s)’ results 1.14-1.15 Reliability of Commission management representations 1.16-1.30 Introduction 1.16-1.18 Annual activity reports and declarations by directors-general 1.19-1.23 Synthesis report of the Commission 1.24-1.30 Budgetary management 1.31-1.38 Budgetary appropriations for commitments and payments 1.32-1.34 Utilisation of payment appropriations at year end 1.35 Outstanding budgetary commitments (RAL) 1.36-1.38 C 344/10 EN Official Journal of the European Union 12.11.2012 THE COURT'S STATEMENT OF ASSURANCE PROVIDED TO THE EUROPEAN PARLIAMENT AND THE COUNCIL — INDEPENDENT AUDITOR’S REPORT I. Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the consolidated accounts of the European Union which comprise the consolidated financial statements ( 1 ) and the consolidated reports on implementation of the budget ( 2) for the financial year ended 31 December 2011; and (b) the legality and regularity of the transactions underlying those accounts. Management’s responsibility II. In accordance with Articles 310 to 325 of the TFEU and the Financial Regulation, management is responsible for the preparation and fair presentation of the consolidated accounts of the European Union and the legality and regularity of the transactions underlying them: (a) Management's responsibility in respect of the consolidated accounts of the European Union includes: designing, imple­ menting and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, on the basis of the accounting rules adopted by the Commission's accounting officer ( 3 ); and making accounting estimates that are reasonable in the circumstances.