PURPOSE: presentation of the EU Court of
Auditors’ report on the annual accounts of the European
Securities and Markets Authority (ESMA) for the financial year
2013, together with the Authority’s replies.
CONTENT: in accordance with the tasks conferred on the
Court of Auditors by the Treaty on the Functioning of the European
Union, the Court presents to the European Parliament and to the
Council, in the context of the discharge procedure, a Statement of
Assurance as to the reliability of the annual accounts of each
institution, body or agency of the EU, and the legality and
regularity of the transactions underlying them, on the basis of an
independent external audit.
This audit concerned, amongst others, the annual
accounts of the ESMA Agency.
Statement of assurance:
pursuant to the provisions of Article 287 of the Treaty on the
Functioning of the European Union (TFEU), the Court has
audited:
- the annual accounts of the Authority, which comprise
the financial statements and the reports on the implementation of
the budget for the financial year ended 31 December
2013;
- the legality and regularity of the transactions
underlying those accounts.
Opinion on the reliability of the
accounts: in the Court’s
opinion, the Authority’s annual accounts present fairly, in
all material respects, its financial position as at 31 December
2013 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.
Opinion on the legality and regularity of the
transactions underlying the accounts:
in the Court’s opinion, the transactions underlying the annual
accounts for the year ended 31 December 2013 are legal and regular
in all material respects.
The report also makes a series of observations on the
budgetary and financial management of the Authority, accompanied by
the latter’s response. The main observations may be summarised
as follows:
The Court’s observations:
- budgetary management:
the Court noted that the level of committed appropriations carried
over to 2014 was high for operational expenditure at 58%. This was
caused by IT services received in 2013 but not yet paid for. In
2013 the Authority made 12 budget transfers amounting to EUR 5.1
million or 18% of the budget), which indicates continued weaknesses
in budget planning;
- financial management:
the Court noted that some 27% of payments made in 2013 for goods
and services received were late. Where payments were late, they
were overdue by an average of 32 days. Late interest paid in 2013
amounted to EUR 3 834. According to the Protocol on the privileges
and immunities of the European Union and the EU VAT Directive, the
Authority is exempt from indirect taxes. Total VAT charged to ESMA
in the period 2011-2013 was EUR 3.3 million. Following lengthy
discussions with the host Member State, the Authority started
claiming VAT reimbursements in the last quarter of 2012, but only
EUR 1.3 million had been claimed back by the end of
2013.
The Authority’s replies:
- budgetary management:
the Authority noted that it is further strengthening the
procurement plan monitoring to reduce the level of carry-overs to
the minimum level possible. Regarding the number of budget
transfers, ESMA started in 2013 to set up periodic budget reviews
to improve budget implementation;
- financial management:
ESMA is aware of the issue related to late payments and took
several initiatives in 2013 in order to address it. ESMA has
streamlined at the end of 2013 the financial circuits and adapted
the forms to improve the timeliness of the process. Due to the
ongoing discussions on the headquarter agreement, ESMA’s
process to recover VAT from the French government was implemented
only end 2012. In 2013, ESMA had therefore to process a back log of
VAT claims for which the last batch was sent out in May
2014.
Lastly, the Court of Auditors’ report contains
a summary of the Authority’s activities in 2013. This
is focused on the following:
Budget: EUR 28.189
million including a EUR 8.6 million Union subsidy.
Activities:
- publication of periodic risk
reports and trend summaries of financial markets;
- development of benchmark principles and
recommendations together with EBA;
- carrying out in-depth analysis of innovative financial
products and processes, notably crowdfunding;
- monitoring and analysing retail investor
trends;
- work on investor education;
- issuing remuneration guidelines for investment firms.
Guidelines covered governance, design and control of pay
schemes;
- publication of three ESAs joint positions on
principles for manufacturers’ product oversight and governance
processes;
- strengthening credit rating agencies (CRA)
supervision. Twenty-two CRAs registered, two certified;
- advice to the Commission;
- conclusion of supervisory cooperation arrangements for
alternative investment funds with 46 non-EU
authorities.