PURPOSE: to grant discharge to the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) for the financial year 2012.

NON-LEGISLATIVE ACT: Decision 2014/593/EU of the European Parliament on discharge in respect of the implementation of the budget of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2012.

CONTENT: with the present decision, the European Parliament grants discharge to the Director of the Centre for the implementation of its budget for the financial year 2012.

This decision is in line with the European Parliament's resolution adopted on 3 April 2014 and comprises a series of observations that form an integral part of the discharge decision (please refer to the summary of the opinion of 3 April 2014).

Amongst the main observations made, Parliament noted the problems in the Monitoring Centre’s audit and in particular in the accuracy of the costs claimed in relation to grants for supporting cooperation under the Reitox network .

The European Parliament adopted a decision concerning the discharge to be granted to the Director of the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) in respect of the implementation of the budget of the for the financial year 2012. The vote on the discharge decision approved the closure of the accounts (in accordance with Annex VI, Article 5(1) of the Rules of Procedure of the European Parliament.

Noting that the Court of Auditors stated that it has obtained reasonable assurances that the annual accounts of the Centre for the financial year 2012 are reliable, and that the underlying transactions are legal and regular, Parliament adopted by 503 votes to 66, with 13 abstentions, a resolution containing a series of recommendations that form an integral part of the discharge decision and as well as the general recommendations that appear in the draft resolution on performance, financial management and control of EU agencies.

These recommendations are summarised as follows:

Financing, budget and financial management : Parliament recalled that the budget of the Centre for the financial year 2012 was EUR 16.3 million. It noted at the same time that the budget monitoring efforts during the financial year 2012 resulted in a budget implementation rate of 99.74 %. Carryovers : it commended the Centre for adhering to the principle of annuality and for the timely execution of its budget. Seat : Parliament noted with concern from the Court of Auditors’ annual audit report that the Centre currently bears the annual cost of about EUR 200 000 for unused office space in its former building and in the new headquarters. It called on the Centre, as a matter of priority, to seek adequate solutions for this unused office space, and to report to the discharge authority, within the framework of the 2012 discharge follow-up, on the steps taken. Performance : Parliament requested that the Centre communicate the results and impact its work has on European citizens in an accessible way, mainly through its website.

Parliament also made a series of observations on transfers, procurement and recruitment procedures as well as comments on internal controls.

Lastly, it acknowledged that the Centre will review its policy on the prevention and management of conflicts of interests on the basis of the Commission's Guidelines on the Prevention and Management of Conflict of Interest in EU Decentralised Agencies. It called on the Centre to inform the discharge authority on the assessment results once available.

The Committee on Budgetary Control adopted the report by Petri SARVAMAA (EPP, FI) on discharge in respect of the implementation of the budget of the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) for the financial year 2012, and called on the European Parliament to grant the Director of the Centre discharge in respect of the implementation of the Centre’s budget for the financial year 2012 .

Noting that the Court of Auditors stated that it has obtained reasonable assurances that the annual accounts of the Centre for the financial year 2012 are reliable, and that the underlying transactions are legal and regular, Members approved the closure of the Centre’s accounts. They made, however, a number of recommendations that needed to be taken into account when the discharge is granted, in addition to the general recommendations that appear in the draft resolution on performance, financial management and control of EU agencies.

· Financing, budget and financial management : Members recalled that the budget of the Centre for the financial year 2012 was EUR 16 .3 million. They noted at the same time that that the budget monitoring efforts during the financial year 2012 resulted in a budget implementation rate of 99.74 %.

· Carryovers: they commended the Centre for adhering to the principle of annuality and for the timely execution of its budget.

Members also made a series of observations on transfers, procurement and recruitment procedures as well as comments on internal controls.

They noted with concern from the Court of Auditors’ annual audit report that the Centre currently bears the annual cost of about EUR 200 000 for unused office space in its former building and in the new headquarters. Members called on the Centre, as a matter of priority, to seek adequate solutions for this unused office space, and to report to the discharge authority, within the framework of the 2012 discharge follow-up, on the steps taken.

Lastly, they asked the Centre to strengthen transparency and prevent conflicts of interests, as well as make publicly available the Declarations of Interests of certain members.

Having examined the revenue and expenditure accounts for the financial year 2012 and the balance sheet at 31 December 2012 of the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), as well as the Court of Auditors' report on the annual accounts of the Centre for the financial year 2012, accompanied by the Centre's replies to the Court's observations, the Council recommends the European Parliament to give a discharge to the Director of the Centre in respect of the implementation of the budget for the financial year 2012.

The observations in the Court of Auditors' report call for certain comments by the Council which can be summarised as follows:

in general, the Council welcomes the Court's opinion that, in all material respects, the Centre's annual accounts present fairly its financial position as at 31 December 2012 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of the Centre's Financial Regulation and that the underlying transactions for that financial year are legal and regular. Carry-overs of appropriations : notwithstanding this favourable finding, the Council calls on the Centre to strengthen its internal control systems in order to reinforce both its ex-ante and ex-post verifications. Headquarters : the Council is concerned about the annual costs borne by the Centre for unused office space available in its former building and in its new headquarters. It invites the Centre to address this issue in cooperation with the European Commission and National Authorities. The Council also encourages the Centre to pursue efforts in order to timely adopt a complete Business Continuity and Disaster Recovery Plan.

PURPOSE: presentation of the EU Court of Auditors’ report on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2012, together with the Centre’s reply.

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 European Monitoring Centre for Drugs and Drug Addiction (EMCDDA).

In the Court’s opinion, the Centre’s Annual Accounts fairly present, in all material respects, its financial position as of 31 December 2012 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its financial rules and the accounting rules adopted by the Commission’s accounting officer.

The Court also considers that the transactions underlying the annual accounts of the Centre for the financial year ended 31 December 2012 are, in all material respects, legal and regular .

The report confirms that the Centre’s 2012 budget amounted to EUR 16.32 million.

The report also makes a series of observations on the budgetary and financial management of the Centre, accompanied by the latter’s response. The main observations may be summarised as follows:

The Court’s observations :

internal controls: in 2012, the Centre gave grants to Member States’ national drug monitoring centres (beneficiaries) in order to support cooperation under the REITOX network. Total grant expenditure in 2012 was EUR 2.6 million, representing 16 % of total operating expenditure. The Centre does not usually obtain from beneficiaries any documents to substantiate the eligibility and accuracy of the costs claimed. Ex post on-the-spot verifications of costs at beneficiary level are rare. Existing controls therefore provide only limited assurance to the Centre’s management as to the eligibility and accuracy of the costs claimed by beneficiaries. For the transactions audited by the Court supporting documentation was obtained by the Centre on the Court’s behalf which provided reasonable assurance as to their legality and regularity. Improvements are needed in this area; headquarters: the Centre currently bears the annual cost of about 200 000 euro for unused office space in its former building and in the new Headquarters. The Centre should continue, in cooperation with the Commission and National Authorities, to seek adequate solutions for this unused office space.

The Centre’s replies :

audit: the Agency states that the EMCDDA has put in place and implemented several processes to ensure adequate ex ante and ex post verifications taking into account the risks at stake. In this context, grant beneficiaries are requested to send a full overview of their expenses (statement of expenses) as well as final financial and activity reports which allow EMCDDA to check the eligibility and accuracy of the costs claimed. In order to further improve the system in place, EMCDDA has taken measures to improve the audit methodology; headquarters: EMCDDA continues actively to look for an adequate solution to sell or lease the premises concerned as well as rationalising and reducing the maintenance costs for the Mascarenhas building, namely by revising the security settings and some patterns for consumption of utilities.

Lastly, the Court of Auditors’ report contains a summary of the Centre’s activities in 2012. This is focused on the following:

running a computerised network for the collection and exchange of information called the ‘European Information Network on Drugs and Drug Addiction’ (Reitox); various publications (e.g. annual report on the state of the drug problem in Europe; publication on selected issues; statistical bulletin and interactive website); setting-up/updating/content development of public EMCDDA website; publication of promotional brochures, media products, press releases and fact sheets; taking part in international conferences and organising scientific and technical meetings.