19.12.2007   

EN

Official Journal of the European Union

C 309/72

REPORT

on the annual accounts of the European GNSS Supervisory Authority for the financial year 2006 together with the Authority's replies

(2007/C 309/13)

CONTENTS

1-5

 INTRODUCTION

6-9

 STATEMENT OF ASSURANCE

10-11

 OBSERVATIONS

Tables 1 to 4

The Authority's replies

INTRODUCTION

1.

The European GNSS (Global Navigation Satellite System) Supervisory Authority (hereinafter ‘the Authority’) was set up as a Community Agency by Council Regulation (EC) No 1321/2004 (1) of 12 July 2004 to manage the public interests relating to the European GNSS programmes and to act as the regulatory authority for the programme during the deployment and operational phases of the Galileo Programme. Table 1 summarises the Authority's objectives and activities.

2.

Council Regulation (EC) No 1942/2006 (2) of 12 December 2006 extended the mandate of the Authority to cover the activities of the development phase (first phase of the Galileo Programme (3)) which the Galileo Joint Undertaking was not able to finalise before its winding-up on 31 December 2006.

3.

The Authority began operations in 2006. Initially, all the financial transactions of the Authority were carried out on its behalf by the Directorate-General for Energy and Transport. Following the installation of the necessary financial systems, the Authority took over responsibility for its financial operations in September 2006 (4).

4.

The handover of activities from the Galileo Joint Undertaking to the Authority started in December 2006 with the transfer of 70 million euro and the rights and obligations related to FP6 (5), MEDA (6), EGNOS (7) and other contracts. Therefore, although the Community subsidy and other revenue for the Authority in 2006 was just over 7 million euro, the total assets of the Authority amounted to 76,6 million euro at the end of 2006.

5.

Key information from the financial statements drawn up by the Authority for the financial year 2006 is presented in Tables 2, 3 and 4.

STATEMENT OF ASSURANCE

6.

This Statement is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (8); it was drawn up following an examination of the Authority's accounts, as required by Article 248 of the Treaty establishing the European Community.

7.

The Authority's accounts for the financial year ended 31 December 2006 were drawn up by its Executive Director, pursuant to Article 12 of Council Regulation (EC) No 1321/2004, and sent to the Court, which is required to give a statement of assurance on their reliability and on the legality and regularity of the underlying transactions. The financial statements cover the period from 18 September (the starting date for independent financial operations) to 31 December 2006.

8.

The Court conducted its audit in accordance with the IFAC and INTOSAI International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular.

9.

The Court has thus obtained a reasonable basis for the statement expressed below.

Reliability of the accountsThe Authority's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Authority's annual accounts for the financial year ended 31 December 2006 are, taken as a whole, legal and regular.The observations which follow do not call the Court's statement into question.

OBSERVATIONS

10.

The Court's testing of a representative sample of 80 transactions identified weaknesses in the operation of the management and control systems. In 12 cases, the initiating official for the transaction did not have the delegated authority and the appropriate financial circuit was not followed. In two cases the Authority's authorising officer did not approve a budgetary commitment before entering into a legal commitment, contrary to the requirements of the Financial Regulation.

11.

According to the Regulation, as of 1 January 2007, the Authority is the owner of all tangible and intangible assets created or developed during the development phase of the Galileo Programme (9). A part of the assets were transferred from the Galileo Joint Undertaking in December 2006 (paragraph 4 above). Due to the absence of agreement between three of the members of the Joint Undertaking (10) and the Authority, the transfer of the further identified assets of 65 million euro (11) was delayed until mid 2007.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 20 September 2007.

For the Court of Auditors

Hubert WEBER

President

(1)  OJ L 246, 20.7.2004, p. 1.

(2)  OJ L 367, 22.12.2006, p. 18.

(3)  The Galileo programme is divided into three phases: development and validation (2001-2005); deployment (2006-2007); and commercial operation (2008 onwards).

In its communication to the European Parliament and to the Council ‘Taking stock of the Galileo programme’ (COM(2006) 272 final of 7.6.2006), the Commission amended the schedule of the Galileo programme. Development and validation will continue until the beginning of 2009; deployment will take place in 2009 and 2010; the commercial operating phase will commence at the end of 2010.

(4)  Agreement on the transfer modalities between the Directorate-General for Energy and Transport and the Authority, 15 September 2006.

(5)  FP6 is the Sixth framework programme of the European Community for research, technological development and demonstration activities, contributing to the creation of the European Research Area and to innovation (2002 to 2006) — (Decision No 1513/2002/EC of the European Parliament and of the Council of 27 June 2002 — OJ L 232, 29.8.2002).

(6)  The MEDA programme is the principal instrument of economic and financial cooperation under the Euro-Mediterranean partnership (Council Regulation (EC) No 1488/96 of 23 July 1996 — OJ L 189, 30.7.1996).

(7)  The EGNOS (European Geostationary Navigation Overlay Service) programme, the European satellite navigation system which aims at correcting and improving GPS data, has been integrated into the Galileo programme following the Council Conclusions of 5 June 2003.

(8)  OJ L 248, 16.9.2002, p. 1.

(9)  Article 3(1) of Council Regulation (EC) No 1321/2004 as amended by Article 1(2) of Regulation (EC) No 1942/2006.

(10)  The European Space Agency, the National Remote Sensing Centre of China and the MATIMOP-Israeli Industry Centre for Research and Development.

(11)  This amount does not include the balance of funds resulting from the winding-up of the Galileo Joint Undertaking, which will only be transferred to the Authority at the end of the winding-up procedure.

 

Table 1

European GNSS Supervisory Authority (Brussels)

Areas of Community competence deriving from the Treaty

Competences of the Authority as defined in Council Regulation (EC) No 1321/2004 and amended by Council Regulation (EC) No 1942/2006

Governance

Resources made available to the Authority

Main products and services supplied in 2006

Competitivity for growth and employment

Objectives

—

To manage the public interests relating to the European GNSS programmes

—

To be the regulatory authority for the European GNSS programmes

Tasks

—

To conclude the concession contract with the private concession holder responsible for implementing and managing the Galileo deployment and operating phases;

—

To ensure that the concession holder complies with the concession contract and the specifications annexed thereto;

—

To take all appropriate measures to ensure the continuity of services in case of default of the concession holder;

—

To manage the funds specifically allocated to it for the European GNSS programmes;

—

To monitor the overall financial management in order to advise on the public sector contributions;

—

To take over the management of the agreement with the economic operator charged with operating Egnos;

—

To present a framework on the future policy options concerning Egnos;

—

To coordinate Member States' actions in respect of the frequencies neccessary to ensure the operation of the system;

—

To prepare drafts in order to assist the Commission in preparing proposals for the European GNSS programmes to be presented to the European Parliament and to the Council and in adopting the corresponding implementing rules;

—

To modernise the system and develop new generations thereof;

—

To accomplish such budgetary implementation tasks as are entrusted to it by the Commission and that are linked to the European GNSS programmes;

—

To ensure that the components of the system are duly certified and to empower the appropriate authorised certification bodies for issuing the relevant certificates and monitoring the respect of related standards and technical specifications;

1.   Administrative Board

Composition

—

One representative per Member State

—

One representative from the Commission

Tasks

—

Appoints the Executive Director;

—

Adopts the annual work programme;

—

Produces a statement of estimates of revenue and expenditure for the Authority for the following financial year and sends it to the Commission which forwards it to the Budgetary Authority;

—

Adopts the budget;

—

Delivers an opinion on the annual accounts of the Authority;

—

Takes decisions on all aspects relating to the system's safety and security;

—

Exercises disciplinary authority over the Executive Director;

—

Adopts the special provisions necessary for the implementation of the right of access to the documents of the Authority;

—

Adopts the annual report on the activities and prospects of the Authority and forwards it, by 15 June, to the Member States, the European Parliament, the Council, the Commission, the European Economic and Social Committee and the Court of Auditors;

—

Adopts its rules of procedure.

Final budget

7,0 million euro including a Community subsidy: 100 %

Staff numbers at 31 December 2006

39 posts in the establishment plan

Posts occupied: 18

+5 other posts (auxiliary contracts, seconded national experts, local and employment-agency staff)

Total staff numbers: 23

assigned to the following tasks:

—

operational: 9

—

administrative: 9

—

mixed: 5

Setting-up of the GSA

—

Financial autonomy in September 2006

—

18 posts filled and 13 others recruited at 31.12.2006

—

Move to new premises was planned and prepared

—

Plan for establishing the System Safety and Security Committee approved on 30.11.2006 and call for nominations issued on 13.12.2006

—

Preparation of the documentation and signing of the transfer of the activities of the GJU (except for the In-Orbit-Validation phase and international activities)

—

Introduction of the basic elements of communication (logo, graphics)

Galileo and EGNOS systems

—

Draft certification plan for EGNOS

—

Preparation and approval of an ESA/GSA agreement by the Administrative Board

—

Contribution to defining a policy for managing the GNSS intellectual property rights

Concession

—

Support given to the GJU negotiating team for the concession contract

—

Start-up of consultations on introducing the accounting rules for recording tangible and intangible assets.

 

 

—

To enforce and verify compliance by the concession holder with instructions issued pursuant to Joint Action 2004/552/CFSP;

—

To manage all aspects relating to the system's safety and security;

—

To take over, with a view to the completion of the development phase of the Galileo programme, the tasks assigned to the latter by Articles 2, 3 and 4 of the Annex to Regulation (EC) No 876/2002;

—

To carry out all research of benefit to the development and promotion of the European GNSS programmes.

2.   Executive Director

Appointed by the Administrative Board.

3.   Scientific and Technical Committee

Composed of acknowledged experts from Member States and the Commission.

4.   System Safety and Security Committee

Composed of one representative per Member State and one representative from the Commission.

5.   External audit

European Court of Auditors.

6.   Discharge authority

European Parliament on a recommendation from the Council.

 

 

Source: Information submitted by the Authority.

Source: Data supplied by the Authority — This table summarises the data provided by the Authority in its annual accounts: these accounts are drawn up on an accrual basis.

Table 2

European GNSS Supervisory Authority (Brussels) — Implementation of the budget for the financial year 2006

(1000 euro)

Revenue

Expenditure

Origin of Revenue

Revenue entered in the final budget for the financial year

Revenue collected

Allocation of expenditure

Appropriations under the final budget

Appropriations carried over from the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

Community subsidies

7 026

7 026

Title I

Staff

2 510

921

522

398

1 589

37

0

37

Other subsidies

 

 

Title II

Administration

1 353

1 060

182

878

293

27

0

27

Other revenue

3

0

Title III

Operating activities

3 100

1 127

0

1 127

1 973

0

0

0

 

 

 

Earmarked revenue

0

0

0

0

0

0

0

0

Total

7 029

7 026

Total

6 963

3 108

704

2 403

3 855

64

0

64

NB: Any discrepancies in totals are due to the effects of rounding.

Source: Data supplied by the Authority — This table summarises the data provided by the Authority in its annual accounts.

Revenue collected and paymets are estimated on a cash basis.


Table 3

European GNSS Supervisory Authority (Brussels) — Economic outturn account for the financial years 2006 and 2005

(1000 euro)

 

2006

2005

Operating revenue

Own resources

0,00

0,00

Community subsidies

1 981,00

0,00

Other subsidies

0,00

0,00

Other revenues

60,00

0,00

Total (a)

2 041,00

0,00

Operating expenses

Staff expenses

564,00

0,00

Fixed asset related expenses

4,00

0,00

Other administrative expenses

595,00

0,00

Operational expenses

53,00

0,00

Total (b)

1 216,00

0,00

Surplus/(deficit) from operating activities (c = a – b)

825,00

0,00

Financial operations revenues (e)

0,00

0,00

Financial operations expenses (f)

0,00

0,00

Surplus /(deficit) from non-operating activities (g = e – f)

0,00

0,00

Economic result for the year (h = c + g)

825,00

0,00


Table 4

European GNSS Supervisory Authority (Brussels) — Balance sheet at 31 December 2006 and 2005

(1000 euro)

 

2006

2005

Non-current assets

Intangible fixed assets

0,00

0,00

Tangible fixed assets

65,00

0,00

Current assets

Short-term pre-financing

0,00

0,00

Short-term receivables

59,00

0,00

Cash and cash equivalents

76 485,00

0,00

Total assets

76 609,00

0,00

Non-current liabilities

Provisions for risks and charges

0,00

0,00

Other long-term liabilities

0,00

0,00

Current liabilities

Provisions for risks and charges

29,00

0,00

Accounts payable (1)

75 755,00

0,00

Total liabilities

75 784,00

0,00

Net assets

Reserves

0,00

0,00

Accumulated surplus/deficit

0,00

0,00

Economic result of the year

825,00

0,00

Total net assets

825,00

0,00

Total liabilities and net assets

76 609,00

0,00

(1)  Including an amount of 70 069 962,04 euro from the Galileo Joint Undertaking for the activities transferred with effect from 1 January 2007. This amount will be reclassified in the 2007 Accounts.

THE AUTHORITY'S REPLIES

10.

These preliminary observations have been the subject of all my attention. With regards to your observation No 10, please consider that the transactions took place during a period of start-up where the Authority's staff was limited in number and was gathering experience while at the same time dealing with a heavy workload. The Authority's situation has much improved since and specific attention has been and is being paid to the training of staff and the improvement and documentation of procedures.

11.

The Court also observes that a part of the Galileo Joint Undertaking's assets for an amount of 65 million euro had not been transferred as of 1 January 2007. I am pleased to confirm that, to date, 97 % of this amount has been received by the Authority and that the issues having slowed down the transfer are resolved.