PURPOSE: presentation of the EU Court of
Auditors report on the annual accounts of the European
Institute of Innovation and Technology (EIT) for the financial year
2016, together with the Institutes 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 focused on the annual accounts of the
European Institute of Innovation and Technology (EIT). The
Institutes objective is to contribute to sustainable European
economic growth and competitiveness by reinforcing the innovation
capacity of the Member States and the European Union. It
awards grants to an increasing number of Knowledge and
Innovation Communities (KICs), linking the higher education,
research and business sectors with one another and aiming thereby
to boost innovation and entrepreneurship.
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 Institute, which comprise
the financial statements and the reports on the implementation of
the budget for the financial year ended 31 December 2016,
and
- the legality and regularity of the transactions
underlying those accounts.
Opinion on the reliability of the
accounts: in the Courts
opinion, the Institutes annual accounts present fairly, in
all material respects, its financial position as at 31 December
2016 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
Commissions accounting officer.
The report also made a series of observations on the
budgetary and financial management of the Institute, accompanied by
the latters response. The main observations may be summarised
as follows:
The Courts comments:
- budgetary management: the level of carry-overs for committed
appropriations for administrative expenditure was high for at EUR
400 000. These carry-overs mainly relate to contracts for IT
services going beyond year-end and for meeting costs for which
invoices had not yet been received;
- internal controls: the
Court found weaknesses related to ex post verifications of
procurement procedures carried out by KIC LEs. Urgent actions
are needed to secure a robust application of the Horizon 2020
legislative framework and to further improve the start-up process
of new KICs. Corrective action shall be taken in this
regard;
·
irregularities:
the Court noted significant shortcomings of KIC Legal Entities (KIC
LEs) procurement procedures. The coordination and representation of
the KICs is carried out by KIC LEs which are almost fully financed
by the Institute. The Court in its audit gave particular attention
to the procurement procedures carried out by these entities which
it considers to be a high-risk area. There is currently
legal uncertainty as to whether KIC LEs represent
contracting authorities. The Institute, together with the
Commissions services, is discussing the matter in order to
achieve legal certainty for KIC LEs in the future.
The Institutes reply:
- budgetary management: EIT stated that the total amount reported by
the Court consists of planned carry-overs that were necessary due
to the nature of activities such as services going beyond year-end
and meetings held in December 2016 for which invoices were only
received in January 2017. These planned carry-overs do not indicate
weaknesses in the budgetary management of the EIT but are a
standard budget management tool.
- internal controls: the
Institute noted that none of the risks identified jeopardise the
robust application of the Horizon 2020 legislative framework and
the EIT has already taken actions to address this
issue;
- irregularities: the EIT
agrees that the procurement processes of the particular KIC Legal
Entities had weaknesses in the audited year. The EIT recognised
this issue and carried out a pilot monitoring activity on the
procurement procedures of one Legal Entity in 2016 and made
targeted recommendations for improvement in this area. Similar
monitoring activities have been conducted for all other KIC Legal
Entities in 2017 and action plans for improvement have been put in
place. The opinion of the EIT has been that KIC Legal Entities
do not fall under the EU public procurement directives.
However, the EIT has recently received contradicting legal opinions
in the matter, which indeed leads to legal uncertainty.
Nevertheless, it is important to note that, regardless of their
status, ensuring best value for money for contracts concluded by
KIC Legal Entities is a legal obligation in the EIT-KIC grant
agreements that are based on the Horizon 2020 model grant
agreement. In addition, the EIT, in consultation with the
Commission services, will establish requirements for KIC Legal
Entities ensuring compliance with the general principles of the EU
public procurement directives.
Lastly, the report contained a summary of the
EITs key figures in 2016:
- Budget: EUR 283 million
(in payment appropriations);
- Staff: 59 full time
(staff includes officials, temporary and contract staff and
seconded national experts).