PURPOSE: to grant discharge to the European Environment Agency (EEA) for the financial year 2012.

NON-LEGISLATIVE ACT: Decision 2014/579/EU of the European Parliament on discharge in respect of the implementation of the budget of the European Environment Agency for the financial year 2012.

CONTENT: with this Decision, the European Parliament gives discharge to the Executive Director of the European Environment Agency for the implementation of the Agency’s budget for 2012.

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

Amongst the main observations made, Parliament noted the problems regarding internal controls and noted that while the Agency’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims, it does not usually obtain any document from beneficiaries to substantiate the eligibility and accuracy of the staff costs claim. This issue should be resolved.

The European Parliament adopted a decision concerning the discharge to be granted to the Executive Director of the European Environment Agency (EEA) in respect of the implementation of the Agency's budget 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 Agency for the financial year 2012 are reliable, and that the underlying transactions are legal and regular, Parliament adopted by 503 votes to 70, with 17 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:

Budget and financial management : Parliament noted that budget monitoring efforts during the financial year 2012 resulted in a budget implementation rate of 99.19% and that the payment appropriations execution rate was 89.41%. It regretted that for the year 2012, the mission expenses of the Executive Director of the Agency were remarkably higher than those of the executive directors of other agencies. It called on the Agency to provide further explanation for this situation to the discharge authority in the framework of the 2012 discharge follow-up. Prevention and management of conflicts of interests and transparency : Parliament stated that the Agency will carry out an assessment to identify its degree of exposure with a view to strengthening or supplementing its policy on the management and prevention of conflicts of interests and with a view to assessing its implementation, monitoring and reporting during the first quarter of 2014 on the basis of the Commission's Guidelines on the matter. It noted that the Agency has revised its policy for dealing with potential conflicts of interest. Respective details are part of the obligations of the Agency's officials and other servants under the Staff Regulations and Conditions for Employment. This information should be clearly presented on the Agency's website. Performance : Parliament requested that the Agency communicate the results and impact its work has on European citizens in an accessible way, mainly through its website.

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

The Committee on Budgetary Control adopted the report by Petri SARVAMAA (EPP, FI) in which it recommended the European Parliament to grant discharge to the Executive Director of the European Environment Agency in respect of the implementation of the Agency'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 Agency for the financial year 2012 are reliable, and that the underlying transactions are legal and regular, Members approved the closure of the Agency’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.

Budget and financial management : Members noted that budget monitoring efforts during the financial year 2012 resulted in a budget implementation rate of 99.19% and that the payment appropriations execution rate was 89.41%. They regretted that for the year 2012, the mission expenses of the Executive Director of the Agency were remarkably higher than those of the executive directors of other agencies. They called on the Agency to provide further explanation for this situation to the discharge authority in the framework of the 2012 discharge follow-up. Prevention and management of conflicts of interests and transparency : they stated that the Agency will carry out an assessment to identify its degree of exposure with a view to strengthening or supplementing its policy on the management and prevention of conflicts of interests and with a view to assessing its implementation, monitoring and reporting during the first quarter of 2014 on the basis of the Commission's Guidelines on the matter. They noted that the Agency has revised its policy for dealing with potential conflicts of interest. Respective details are part of the obligations of the Agency's officials and other servants under the Staff Regulations and Conditions for Employment. This information should be clearly presented on the Agency's website.

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

Having examined the revenue and expenditure accounts for the financial year 2012 and the balance sheet at 31 December 2012 of the European Environment Agency, as well as the Court of Auditors' report on the annual accounts of the Agency for the financial year 2012, accompanied by the Agency's replies to the Court's observations, the Council recommends the European Parliament to give a discharge to the Director of the Agency 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 Agency'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 Agency's Financial Regulation and that the underlying transactions for that financial year are legal and regular. Controls : notwithstanding this favourable finding, the Council encourages the Agency to strengthen its ex-ante verifications of grant applications and to base them not only on desk checks of the beneficiaries' cost statements, but also on supporting documentation to be submitted by the beneficiaries for substantiating the eligibility and accuracy of the claimed costs, as well as on a reasonable sample of on-the-spot verifications at beneficiary level, in order to increase the assurance provided by the verification process.

PURPOSE: presentation of the EU Court of Auditors’ report on the annual accounts of the European Environment Agency for the financial year 2012, together with the Agency’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 Environment Agency (EEA).

In the Court’s opinion, the Agency’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 Agency for the financial year ended 31 December 2012 are, in all material respects, legal and regular .

The report confirms that the resources made available to the Agency in 2012 amounted to EUR 41.7 million.

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

The Court’s observations :

internal controls: in 2012, the Agency awarded grants under three major grant programmes to consortia consisting of environmental institutions and bodies in Europe, UN organisations and national environment organisations. Total grant expenditure in 2012 was EUR 11.9 million, representing 27% of the total operating expenditure. The Agency’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims. It does not usually obtain from beneficiaries any document to substantiate the eligibility and accuracy of the staff costs claimed, which represent the main part of costs. Ex ante on-the-spot verifications of costs at beneficiary level are rare. Existing controls therefore provide only limited assurance to the Agency’s management as to the eligibility and accuracy of the costs claimed by beneficiaries. Improvements in this area are necessary.

The Agency’s replies :

audits: the Agency states that over the past decades, the EEA has accumulated a vast experience in dealing with grant agreements and the cost structure of especially the European Topic Centres. Hence, there is a solid basis upon which cost statements (including staff costs) are evaluated. However, we acknowledge the European Court of Auditors’ observation and, based upon a further risk analysis, an action plan has been drawn up to ensure reasonable assurance. The call for proposals launched in 2013 includes a revised framework partnership agreement in which contractual provisions have been updated. The EEA has decided to increase the number of on-the-spot verifications in line with the Court of Auditors’ recommendation.

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

production of press releases; data sets; promotional material; corporate documents and reports; pan-European assessments; the state of the Environment report (SOER 2010).