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COUNCIL OF

THE EUROPEAN UNION

Brussels, 15 December 2008





17160/08

ADD 1





EUROPOL 83



ADDENDUM TO THE NOTE

from:	Europol

to:	Article 36 Committee

Subject :	Audit report and discharge for the period of 1 January 2007 -
31 December 2007

- Decision of the Europol Management Board

- Comments on the annual report of the Joint Audit Committee (JAC) for
the financial year 2007

- Opinion of the Europol Financial Controller

- The draft conclusions of the 20th ordinary meeting of the Financial
Committee on 10 November 2008



Delegations please find in annex the above-mentioned supporting
documents regarding the discharge for 2007.

________________________ANNEX 1

EUROPOL

Management Board	The Hague, 3 December 2008

MBS 187.2008



DECISION OF THE MANAGEMENT BOARD

of 3 December 2008

on a recommendation to the Council concerning discharge to be given to
the Director in

respect of the implementation of the 2007 budget

THE MANAGEMENT BOARD OF EUROPOL,

Having regard to Article 36(3) of the Convention on the establishment of
a European Police Office and Article 55(2) of the Financial Regulation
applicable to the budget of Europol,

Having regard to the 2007 financial statements,

Having regard to the Joint Audit Committee’s report of 21 October 2008
on the 2007 accounts,

Having regard to the opinions of the Director and the Financial
Controller on the audit report,

Having regard to the opinion of the Financial Committee,

HAS DECIDED AS FOLLOWS:

The Management Board recommends to the Council to give discharge to the
Europol Director for the implementation of the 2007 budget.

Done in Paris (France), on 3 December 2008

Bernard Petit

ChairmanANNEX 2

EUROPOL

	The Hague, 10 October 2008

File no: 2270-106r3 



Comments on the Annual Report of the

Joint Audit Committee of Europol

for the financial year 2007

I.	Budget implementation and treasury management

1.	This way of reporting is both consistent compared to previous years
and provides the main stakeholders, i.e. the Member States, with a clear
view of what has lapsed and will be deducted from the contributions t+2.


2.	See point 4 below.

3.	See point 4 below.

4.	As stated by the JAC, Europol is aiming for improvements by only
calling-up part of the full budget (commencing in 2008) and carries out
an extensive full-year forecasting exercise in the middle of the budget
year upon which to base the rest amount to be called-up in order to
reduce the amounts held on bank accounts.

The suggested ex-post assessment of the interest earned and the closely
monitoring of the interest earnings is part of the treasury management
as developed by Europol. These tasks are planned to commence in 2008 by
a new staff member recruited for this purpose.



II.	Gains from trade-ins

5.	Europol agrees that procedures are put in place to ensure that the
gains related to trade-ins are applied and accounted for systematically
in the future and amended its accounts for 2007 accordingly.  Europol
appreciates the JAC’s recommendation on how to deal with these
trade-ins within its financial system as detailed in the annex to the
covering letter enclosing the preliminary report addressed to
Europol’s Head of Finance, Mr Vermeulen, dated 16 September.

III.	Procurement procedures

6.	There is room for better planning in the field of Procurement. 
Therefore, in this respect, Europol recognises the JAC’s concerns. 
However the exemptions did not contradict Europol’s current rules. 
Indeed in a majority of cases there was only one possible supplier
(Article 41.2(d)) of the Financial Regulation.

IV.	Effectiveness of information systems

9.	Europol provided the JAC with first quantitative performance
indicators. As Europol is in the middle of the deployment phase it is
too early to implement qualitative performance indicators. This can only
be done when the full transformation is done and all users are fully
converted towards the changes brought.

The quantitative indicators already showed an improvement which exceeded
the expectations. As an example, with the upload of all available AWF
information it became apparent that there is an increase in average of
factor 5 of available information in the AWFs. 

The process of structuring unstructured information in such a way that
it can be used for analysis is reduced to 10 % in time of what it used
to be. This process represented the bulk of the workload in the previous
situation. The time gain in the processing of the information is
applicable on 76 % of AWF information since 76 % is unstructured. It is
only 8 % which is provided in structured format, the remaining
information is multi-media files such as pictures, videos, etc. More
results will become available when qualitative indicators are
implemented.

V.	The Establishment of Europol as a European Agency

15.	As in the past, Europol has made an annual assessment of the Europol
Unemployment Fund. The assessment 2008 has not taken into account the
impact of the change over to the new Staff Regulations as the related
details were not available yet. However, once these details are known,
Europol will make a new assessment.

VI.	Follow-up on observations made in 2006

16.	The interim solution based on spreadsheets is now operational. As
part of the implementation of accrual-based accounting (ABAC), Europol
will look for the best approach regarding its future financial
information system, included the contract database.

18.	An agreement on the principles of the demarcation of costs was 
reached in the Management Board meeting of 11 and 12 July 2007.  Further
details will need to be worked out in the course of 2008-2009 as part of
a separate agreement on the future housing of the organisation between
Europol and the Host State.

20. 	Europol is maintaining its comments of the previous years.

ANNEX 3

To:	The Members of the Management Board 

	The Joint Audit Committee of Europol

From:	The Financial Controller

Subject: Audit Report 2007 from the Joint Audit Committee

Dear Members of the Management Board,

Dear Members of the Joint Audit Committee,

In accordance with Article 55 of the Europol Financial Regulation I
would like to comment as follows on the Audit Report of the Joint Audit
Committee of Europol (JAC) for the financial year 2007, dated on 21
October 2008.

In general, I would like to note that the content of the Audit Report
2007 complies with my observations as Financial Controller.

In addition, I would like to make the following specific comments, for
which I will follow the order of the content of the audit report.  

I) Budget implementation and treasury management

Paragraph 1:

In order to further clarify, in particular the wording “may” in the
last sentence of this paragraph; I would like to note that such
improvement will depend on the extent to which the “unpaid”
commitments automatically carried over to 2008, will result in actual
payment in that year. This will be known per 31 December 2008.



Paragraph 3:

I share the observation of the JAC that Europol should continue striving
for further improvements in budgetary planning and accuracy, in
particular in view of Europol’s transition to its new Legal Framework,
which will imply Community financing and consequently accrual based
accounting.

Paragraph 4: 

This paragraph refers to Europol’s proposal, presented to the
Management Board at their meeting in July 2008, for a second call up of
the contributions of the Member States as foreseen in the budget 2008,
to a total amount of € 7,817,000. The Management Board unanimously
agreed with Europol’s proposal. As a result, together with the first
call up of € 41,332,167, the contributions of the Member States to the
budget 2008 amount to € 49,149,167. Europol expects to achieve an
implementation rate of the budget 2008 of just over 97%, by which there
would be a reducing effect on Europol’s cash assets.

During the aforementioned meeting I expressed my doubts on a number of
assumptions made by Europol on which it based its proposal for the
second call up of € 7,817,000. In particular, I expressed the view
that the forecast of expenditure on 

Title 2 (salary and salary related expenditure) of the budget 2008 was
based on an ambitious recruitment plan that would lead to 4 vacancies
per 31 December 2008. I considered that such plan is not realistic and
might lead to an under-spend. 

III) Procurement procedures

Paragraph 6:

I share the view of the JAC that procurements need to be carefully
monitored. Not only as they affect a substantial part of Europol’s
budget, but also in view of the transition of Europol to its new Legal
Framework as well as Europol’s move to its new Headquarters in 2010.
Procurement is and will be affected by these major changes.



In addition, I would like to note that I also share the view that there
is room for better planning in the field of Procurement. Such better
planning, for instance by means of an appropriate contracts database,
would avoid situations that occurred in 2007, where tender procedures
could not be finalised in time by which, as a necessity, contracts in
place had to be extended beyond their final expiry date. Exemptions,
based on Article 41 (2d) of the Europol Financial Regulation, had to be
granted in order not to endanger business continuity. However, it can be
questioned whether the usage of this Article is in compliance with its
meaning.     

IV) Effectiveness of information systems

Paragraph 7

I fully agree with the text which regards the Europol Information
System. In addition I would like to note that it would be a
misunderstanding that only the volume of data would affect the
effectiveness of this system. In my view the quality of such data is of
at least equal importance.  

Paragraph 9: 

I fully share the recommendation of the JAC to develop performance
indicators to assess and monitor the effectiveness of OASIS on an
ongoing basis. 

V) The establishment of Europol as a European Agency

Paragraph 15:

I share the view of the JAC that Europol should consider the possibility
to increase the frequency of assessments of the Unemployment Fund, which
are currently conducted on a yearly basis.



Europol’s transition to its new legal framework will, in particular,
also make high demands on the extent to which the Unemployment Fund can
fulfil its liabilities, in specific towards staff that will serve an
“old” Europol contract after the Europol Council Decision will
become applicable. To ensure that the Unemployment Fund continues
fulfilling its liabilities, I would consider an assessment each semester
as appropriate. 

VI) Follow-up on observations made in 2006

Paragraph 16:

Indeed, the current contracts database is still based on a spreadsheet
solution, which I also consider as very vulnerable and thus as a
potential risk for the organisation. I therefore share the
recommendation of the JAC to replace the current solution as soon as
possible by a more sustainable one.

Aat van der Meer                                                        
                          23 October 2008

 

ANNEX 4

EUROPOL

	The Hague, 14 November 2008

File nº 5151-20081110CO

EDOC#353201-v3



Draft Conclusions of the 20th ordinary meeting of the

Financial Committee on 10 November 2008

2.	Adoption of Draft Agenda

	The draft agenda was adopted without comments.

3.	Draft Minutes of the 19th ordinary meeting of the Financial Committee
on 26-27 February 2008

	The draft minutes from the 19th ordinary meeting of the Financial
Committee held on 26-27 February 2008 were adopted without comments.

4.	State of affairs concerning the action plan to improve the financial
administration of Europol 

	

	The main points of concern were:

•	The lack of Disaster Recovery and Business Continuity plans

•	The lack of a proper contract database (risks on information held on
spreadsheets)

	Europol informed the Committee on measures taken so far and that the
matters were all being looked into seriously.



5.	Discharge 2007

	The report of the Joint Audit Committee and Europol’s financial
statements were presented and commented upon as follows:

•	Europol should strive towards expenditure-based (rather than
commitment based) budgeting as this would in any case be required once
under the new legal framework of the European Commission.

•	Regarding the current credit crisis, Europol informed the Committee
about its action taken to safeguard as much as possible the capital held
on its bank accounts.

	The Committee provided its positive advice to the Management Board on
the discharge 2007 to the Director of Europol.

6.	Implementation of the 2008 Budget

	The Financial Committee was informed that due to the late tabling of
the retroactive salary increase at the European Council, there might be
the possibility that Europol requests a non-automatic carry over of
budget to ensure the 2009 budget does not fall short.  The Financial
Controller supported this.  Europol was asked to ensure that before 14
November 2008, it provided the Management Board with a list of any such
requests and any contracts to be concluded in 2008 above the € 150K
threshold from which the Management Board was required to unanimously
authorise.

	The Committee took note of the implementation of the 2008 budget and
provided its positive advice to the Management Board regarding the
supplementary budgets.

7.	Mission Allowances 2009 

	Europol presented its proposal to apply the same allowances as those
used by the European Commission to better prepare for the transition.

	Positive advice was given by the Financial Committee to the Management
Board on the mission allowances 2009 as presented by Europol and
supported by the Financial Controller.



8.	Council Decision replacing the Europol Convention – Implementation
of the EC Financial Framework

	a.	Planning process for the 2010 budget, work programme and staff
policy plan

	Europol presented the planning of the Budget, Work Programme and Staff
Policy Plan 2010 to the Committee who took note.

	b.	Draft Europol Financial Regulation and list of deviations

	Following Europol’s presentation of its briefing note on this subject
and subsequent questions from the delegations answered, the Financial
Committee endorsed the proposed deviations to the Framework Regulation
and gave its positive advice to the Management Board to adopt the Draft
Financial Regulation including the deviations.

	c.	Structure of the 2010 budget

	Europol highlighted the importance of the distinction between the
administrative budget in title 2 and the operational budget of title 3
and that if it was not justified in a financing decision, no expenditure
on the operational budget would be allowed. As the Financial Regulation
considered the Work Programme as a financing decision, it made that
element more crucial than ever for budget implementation and it should
cover all operational activities of Europol.

	The Committee took note of the new structure.

	d.	Internal audit function

	The Financial Controller gave a general introduction to the new
internal audit function as from 2010 and informed the Committee that the
difference with the function within Europol and that within other
agencies was that the staff employed for the function would be recruited
by and directly responsible to the Management Board rather than the
Director (one of deviations mentioned under point b. above).  That did
not mean however that the Director would not be consulted before
reporting to the Management Board.



	The Committee took note of the information provided and was invited to
address any suggestions/pending issues to the next ad-hoc Management
Board meeting.

	e.	Dissolution of the JSB Appeals Fund

	Europol’s proposal, supported by the JSB, for the abolition of the
JSB Appeals Fund was given positive advice by the Financial Committee to
the Management Board.  This would be done via a written procedure.

	f.	Transitional measures for the Europol Unemployment Fund

	Europol explained the situation in relation to the Unemployment Fund
and the possible risk that the fund would not be able to finance claims
up to the expected year of 2016 due to the decrease in contributions and
increase in claims.  The proposal to place a specific budget line from
2010 in case the fund be insufficient was agreed by the Committee and
the Financial Controller.  This advice would be presented to the
Management Board via a written procedure.

	g.	Transitional measures for the Europol Pension Fund

	Due to the complexity of the matter, there were concerns in the
Committee about the level of expertise required to deal with the matter
both from the Financial and Personnel Expert side. Europol informed the
Committee that the document presented (File no. DMS#339141-v10) had been
discussed at length during the last meeting of Management Board of the
Europol Pension Fund where it had been decided to hold an extraordinary
meeting (2nd half of January 2009) to prepare for the Council decision
and suggested to extend the meeting to the delegation of Personnel
Experts and Financial Committee and also to invite the European
Commission and other experts (eg actuary) in order that an informed
decision could be made.  The Committee agreed with this approach and
therefore the document would be re-worded for the Management Board
meeting in December 2008.



9.	Conclusions/Any Other Business

	No items were raised under this item.

______________________

 OJ C 316, 27.11.1995, p. 1

 OJ C 312, 29.10.1999, p. 1

 File no. 2270-103r2

 File no. 2270-106r3

 Opinion dated 23 October 2008

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