Report on the annual accounts of the Office of the Body of European Regulators for Electronic Communications for the financial year 2015, together with the Office’s reply 2016/C 449/03
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Address https://gelex.eu/eli/EU/notice/oj/C/2016/449/03@2016-09-13/en
The Office of the Body of European Regulators for Electronic Communications (hereinafter the Office), which is located in Riga, was established by Regulation (EC) No 1211/2009 of the European Parliament and of the Council. The Office’s main task is to provide professional and administrative support services to the Body of European Regulators for Electronic Communications (BEREC) and, under the guidance of the Board of Regulators, to collect and analyse information on electronic communications and to disseminate among National Regulatory Authorities regulatory best practices such as common approaches, methodologies or guidelines on the implementation of the EU regulatory framework. The Table presents key figures for the Office. Source: data provided by the Office. 2014 2015 Budget (million euro) 4,2 4,0 Total staff as at 31 December 27 26 The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:
(a) the annual accounts of the Office, which comprise the financial statements and the reports on the implementation of the budget for the financial year ended 31 December 2015; and
(b) the legality and regularity of the transactions underlying those accounts.
The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions:
(a) The management’s responsibilities in respect of the Office's annual accounts include designing, implementing and maintaining an internal control system 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; making accounting estimates that are reasonable in the circumstances. The Office has delegated these responsibilities to the Commission’s accounting officer by means of a service level agreement. The Administrative Manager approves the annual accounts of the Office after the Commission’s accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.
(b) The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.
The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts 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 the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation. The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2015 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2015 are legal and regular in all material respects. The comments which follow do not call the Court’s opinions into question. In 2013 the Office signed a 4-year framework contract for the provision of professional event organisation services. However, it underestimated its needs and the contract had reached its maximum amount in December 2014. A procurement procedure to sign a new framework contract was launched, but only in August 2015. In the meantime the Office procured these services from the same provider using purchase orders and low-value contracts (negotiated procedures). The total amount of the services so procured exceeded the threshold value. An open procurement procedure where all interested economic partners may submit a tender should have been used. The Office’s audited budgetary implementation report differs from the level of detail provided by most other agencies which demonstrates the need for clear guidelines on the agencies’ budget reporting. Carry-overs of committed appropriations for Title II (administrative expenditure) were high at 134228 euro, i.e. 44 % (2014: 91757 euro, i.e. 40 %). These carry-overs are mainly related to the delivery of services that go beyond 2015. An overview of the corrective actions taken in response to the Court's comments from previous years is provided in the Annex. This Report was adopted by Chamber IV, headed by Mr Baudilio TOMÉ MUGURUZA, Member of the Court of Auditors, in Luxembourg at its meeting of 13 September 2016. For the Court of Auditors Vítor Manuel da Silva Caldeira President
ANNEX
ANNEX Follow-up of previous years’ comments
Year Court's comment Status of corrective action (Completed/Ongoing/Outstanding/N/A) 2011 The Office had not yet adopted and implemented all the internal control standards. Completed 2013 Of the 1183 reimbursements for experts made in 2013, 1078 were late. Where payments were late, they were overdue by an average delay of 78 days in the first half of 2013 as compared with 33 days in the second half of 2013. Completed 2014 The overall level of committed appropriations improved to 98 % (2013: 87 %). However, the level of committed appropriations carried over increased to 0,9 million euro, i.e. 23 % (2013: 0,5 million euro, 13 %), particularly in relation to operational activities (title III) such as on-going studies on electronic communications. N/A 2014 The large number of budget transfers changed the structure of the initial budget considerably: title I (staff costs) was reduced by 17 %, title II (administrative expenditure) was reduced by 44 % and title III (operational expenditure) was increased by 60 %, mainly in order to finance on-going studies. Completed 2014 The 2014 budget provision for contributions from EFTA’s national regulatory authorities having observer status at BEREC did not materialise in the absence of agreements with EFTA countries. Outstanding
THE BEREC OFFICE REPLY
The BEREC Office would like to thank the Court for the detailed review of the Agency’s procurement planning procedure and the recommendations made for improvement. The BEREC Office will revise its existing procurement rules and will reconsider its current decentralised procurement model with a view to streamlining the process. The BEREC Office takes note of the comment that the audited budgetary implementation report differs from the level of detail provided by most other agencies, which demonstrates the need for clear guidelines on the agencies’ budget reporting. The BEREC Office — who, in line with the suggestions in the Framework Financial Regulation, has outsourced the role of Accounting Officer to the Accounting Officer of the European Commission — is of the understanding that the different level of details is based on the practices of the Commission’s reporting and to avoid having largely similar information in two different reports. The BEREC Office will follow any guidelines for the agencies’ budget reporting for the next financial year provided that such guidelines are issued. The BEREC Office takes note of the budgetary management comment on committed appropriations in relation to administrative expenditure for Title II. These carry-overs are mainly related to the delivery of services that go beyond 2015 and are coming from normal operations of the BEREC Office, which were planned in advance. The BEREC Office has set a target to reduce the level of committed appropriations carried over in 2016 for administrative expenditure.