Changes from report parliamentary committee draft to plenary report

Added34. Underlines that the Court considers the overall risk to the legality and regularity of revenue underlying the agencies’ accounts to be low for most agencies and to be medium for the partly self-financed agencies where specific regulations are applicable to collection of fees and other revenue contributions, as was the case in 2022;

Added35. Remarks that the Court considers the risk to the legality and regularity of payments underlying the agencies’ accounts overall to be medium, varying from low to high for specific budget titles; notes that the Court considers the risk for Title I (Staff Expenditure) to be generally low, for Title II (Administrative Expenditure) to be medium and for Title III (Operational Expenditure) to be low to high, depending on the agency in question and the nature of its operational expenditure; points out that the Court considers the risk as regards Title III similar to the risk of Title II, but since there are far higher amounts at stake under Title III, the impact is considered to be higher;

Added36. Is concerned that the Court, for the sixth year in a row, considers the risk to sound financial management to be medium and primarily associated with public procurement procedures that did not ensure that the best possible value for money was achieved;

Added37. Notes that the Court considers the risk to budget management to be low, with the Court’s audit showing high carryovers of committed appropriations;

Added38. Notes that, according to the Court’s report, the prevalent issues across the agencies were: i) Public procurement weaknesses, which remained the largest source of irregular payments; ii) Budgetary management challenges, such as excessive carryovers and late payments; iii) Internal control weaknesses, particularly in ensuring compliance with financial regulations and procedural guidelines;

AddedOverview of the audit results

Added39. Notes that the Court issued an unqualified audit opinion on the reliability of the accounts of all agencies; notes that the Court issued an unqualified opinion on the legality and regularity of the revenue underlying the accounts for all agencies; observes, however, that while an unqualified opinion on the legality and regularity of the payments underlying the accounts was issued for most agencies, exceptions were noted for four agencies: the European Institute of Innovation and Technology (EIT), the European Labour Authority (ELA), the European Union Agency for Cybersecurity (ENISA) and the European Union Agency for the Operational Management of Large-Scale IT Systems (eu-LISA);

Added40. Observes that, for the EIT, the qualification concerns irregular grant payments, where EIT conducted ex post verification on a sample of 174 cost items; notes that EIT rejected costs related to 27 cost items and that the Court identified three additional cost items for which EIT could not provide evidence that beneficiaries met essential grant agreement conditions, resulting in an estimated total of EUR 12,2 million in irregular grant payments, corresponding to an estimated error rate of 3,4 %; notes that the EIT disputes one of the errors reported by the Court, affecting three cost items, which, in its opinion are eligible; notes furthermore that according to EIT, without this case, the estimated error rate reported by the Court would be below the 2 % materiality threshold, leading to a clean audit opinion on the legality and regularity of EIT’s payments;

Added41. Regrets that, concerning ELA, the qualification relates to payments amounting to EUR 1,6 million in 2023, representing 3,8 % of the total payment appropriations available; notes that this amount includes EUR 1,3 million related to a contract deemed irregular in the 2022 audit report due to the awarded value exceeding the established maximum contract limit and EUR 0,3 million associated with deficiencies in ex ante checks on contract implementation; takes note of ELA reply’s explaining that the irregular contract ended on February 2024 and was replaced by a new framework agreement established in November 2023; is aware of ELA’s decision to continue with the irregular contract temporarily to mitigate risks, protect its reputation and ensure uninterrupted service delivery, allowing it to maintain consistent operations and fulfil planned activities until the new agreement took effect;

Added42. Notes that, for ENISA, the qualification relates to irregular payments of EUR 1,8 million made in 2023, representing 4,1 % of the total payment appropriations available in 2023; recalls that in August 2022, ENISA received an additional EUR 15 million in its budget to provide enhanced cybersecurity support to member states following Russia's invasion of Ukraine; further notes that in September 2022, ENISA initiated a procurement procedure with 28 lots and subsequently signed 28 separate framework contracts worth EUR 14,4 million; is aware that in early 2023, the management board made an exception to temporarily deviate from its financial regulations to meet revised cybersecurity support requests from member states; takes note that according to ENISA’s reply, the management board’s decision constituted an exception (limited in time and scope) to respond to a particular exceptional situation in an extremely difficult international context; notes that this exception was duly registered as per application of ENISA's Internal Control Framework and accordingly reported in the 2023 Consolidated Annual Activity Report;

Added43. Observes that, for eu-LISA, the qualification concerns irregular payments totalling EUR 12,6 million made in 2023, representing 3,2 % of total payment appropriations available including EUR 2,7 million for contracts audited in 2023 and EUR 9,9 million for contracts assessed as irregular in the 2022 audit report;

Added44. Notes with concern the recurrence of a qualified opinion on the legality and regularity of eu-LISA’s payments, reflecting persistent issues raised by the Court in previous reports since 2020; takes note of the Court’s observation that most of the contracts affected by error have either expired or been terminated by eu- LISA in 2023;

Added45. Observes that the basis for a qualified opinion (eu-LISA) in 2023 included the following irregularities:

Added– framework Contract Irregularity: notes that eu-LISA made significant changes in some pricing elements of the financial offers of two tenderers, going beyond the corrections allowed under Article 151 of the Financial, directly affecting the tender’s outcome, with related payments totalling EUR 2,7 million in 2023

Added– unjustified Negotiated Procedure: further notes the irregular payment of EUR 7,7 million connected to a framework contract awarded via a negotiated procedure without proper justification, contravening procurement standards;

Added– unauthorised Contract Amendment: observes that payments amounting to EUR 1,8 million were classified as irregular following an unauthorized amendment that increased the value of a fixed-price contract by EUR 3,6 million;

Added– non-compliance with Framework Contract Terms: notes with concern that payments of the framework contract for maintaining shared infrastructure totalling EUR 0,4 million were irregular, as the specific contract deviated from the framework contract;

Added46. Expresses deep concern over the recurrence of procurement issues that result in a qualified opinion for the fourth year in a row and urges eu-LISA to take immediate corrective action to address and prevent these problems in future financial management and procurement practices, ensuring full compliance with the Financial Regulation; calls for informing the European Parliament on the progress in question before 30 June 2025;

Added47. Welcomes that the Court, during the hearing, acknowledged that despite the opinion issued for 2023 (eu-LISA), the identified faults are being addressed and improvements have been noted;

Added48. Insists that although the Financial Regulation does not set ceilings for carryovers, recurrent and excessive levels of carryovers undermine the budgetary principle of annuality and are indicative of structural issues in the budget process and implementation cycle; notes that in 14 Agencies (ENISA, Eurofound, EIGE, eu-LISA, EMA, EUSPA, ELA, FRA, EFCA, ECDC, EU-OSHA, ACER, Frontex and ESA) the level of carryovers affecting all budget titles combined is higher than 15 %; notes that in the case of Frontex and ESA, carryovers reach more than 40 % and 50 % respectively;

Added49. Recalls that the regulatory framework mandates that agencies make payments within specific deadlines; notes that any failure to meet these deadlines may result in creditors being entitled to late-payment interest; observes that, for the year 2023, the Court reports that while the total amount of late-payment interest incurred was considered immaterial, it is noteworthy that nine agencies (ACER, ECDC, EEA, EUDA, ENISA, ERA, EU-OSHA, Eurojust and Frontex) frequently failed to meet their payment deadlines; asks the agencies in question to ensure adherence to legal time limits for payments; highlights that although the amount of late-payment interest incurred was minor, the high frequency of delayed payments may negatively impact the agencies’ reputations;

Added50. Highlights that the Court issued ‘emphasis of matter’ paragraphs to underline a matter presented or disclosed in the accounts which is of such importance that it is fundamental to the understanding of the accounts or the underlying revenue or payments; further notes that, for the 2023 financial year, the Court used ‘emphasis of matter’ paragraphs for the following agencies that are part of this resolution: CdT, EBA, EIT, EMA, ERA, ESMA, Eurojust, eu-LISA and Frontex;

Added51. Recalls that CdT provides disclosures in its financial statements on the decline in operating revenue, which has negatively affected its economic outcome;

Added52. Draws attention to disclosures in the annual accounts of ERA and Eurojust regarding the implementation of SUMMA; notes that, throughout 2023, technical issues continued to contribute to a rise in late payments (50 % in 2023) and instances of non-compliance in Eurojust; notes that ERA experienced technical issues during the first trimester, though substantial improvements were made in comparison with 2022;

Added53. Notes that the accounts of ESMA and the EBA include a disclosure of uncertainty regarding the outcome of a lawsuit; takes note that ESMA was formally notified of a legal case related to a joint procurement procedure where apart from ESMA, three other EU agencies participated (EBA, EIOPA and ERA); is aware that the procedure resulted in a framework contract worth EUR 40,2 million and by the end of 2023, ESMA and EBA had signed specific contracts totalling in ESMA EUR 2 185 226 and EUR 6 306 786 in the case of EBA;

Added54. Is concerned that the applicant is seeking annulment of a tender decision and monetary compensation ranging from EUR 400 000 to EUR 3,5 million; notes that due to the early stage of the proceedings, the management of both ESMA and EBA are unable to provide a reliable estimate of potential costs resulting from the case;

Added55. Draws attention to the disclosure in ESMA’s accounts of an impairment of EUR 368 300, corresponding to outstanding fees from third-country supervised entities; notes that the impairment is linked to the fact that the European Market Infrastructure Regulation (EMIR) does not provide ESMA with an effective mechanism for enforcing the collection of outstanding fees from outside the Union; welcomes that the recent co-legislators’ agreement to amend the regulation (EMIR 3) introduced the possibility for ESMA to withdraw recognition from third-country supervised entities that do not pay their fees;

Added56. Notes that the EBA’s accounts include disclosures on the significant impacts of the Digital Operational Resilience Act (DORA) and the Markets in Crypto-assets Regulation (MiCAR) as regards the unfunded resources needed to set up the related tasks and implement an appropriate oversight and supervisory policy that took place in 2023 before fee collection could start; takes note that EBA had to reallocate resources to these preparatory activities;

Added57. Takes note that the EIT’s accounts disclose assumptions that were used to estimate operational costs (grant expenses), which are accrued and presented in the balance sheet as a decreasing item of pre-financing assets; recalls that grant expense accrual is a significant estimate that inevitably entails uncertainty;

Added58. Notes that EMA provides significant disclosures in its annual accounts relating to its former London premises and the uncertainties created by the fact that the subtenant´s parent company has filed for bankruptcy; notes with concern that EMA could be held liable for the entire amount remaining payable under the head lease; is aware that the maximum amount, including a council tax liability, that will be payable by EMA if the premises remain vacant for the remainder of the lease, is EUR 550 million; notes that EMA is currently renegotiating the sublease conditions with the group’s UK branch and as part of these renegotiations, EMA has agreed to a deferral of rental payments for the first two quarters of 2024 and a reduction in the subtenant’s rent from 1 January 2024; notes that in this connection EMA has made a provision for onerous contract in the amount of EUR 131,4 million; takes note that the Agency´s subtenant has met its contractual obligations for the year 2023, with rental payments covering the period up to 31 December 2023 and urges EMA and the Commission to find a sustainable solution to terminate the contract and all associated obligations before the next discharge procedure in 2024;

Added59. Observes that the accounts of eu-LISA include a disclosure regarding the financial situation of a key contractor with two active framework contracts; notes that eu-LISA has two active framework contracts with a contractor that is a member of a consortium and that this contractor replaced its parent company in the contracts and is responsible for implementing and maintaining the Entry Exit System and providing services under the Transversal Operations Framework Lot 1; takes note that the outstanding contracted amounts are EUR 97,5 million and EUR 41 million respectively; notes that in order to address potential risks related to the financial viability of the parent company, eu-LISA closely monitors the contractor's financial health using independent risk assessment tools and direct queries; notes that additionally, eu-LISA regularly assesses the progress of Assets under Development (AuDs) to ensure no adverse impacts on their mandate and are proactive in managing and mitigating risks associated with supply chain disruptions within the limits of the financial rule;

Added60. Recalls the recurrent different approaches of Frontex and the Court regarding the calculation of contributions from Schengen Associated Countries (SAC) to Frontex’s budget; takes note that the Court considers Frontex’s interpretation to be flawed, leading to the SAC contributing around EUR 3,5 million (7 %) less to Frontex’s budget than the size of their economies, in relation to the economy of the Union, would dictate; takes note that the accounting officer ad interim examined the situation and, similar to the MB, considers that there is no need for Frontex to revise the current calculation methodology concerning the contribution of the SAC to the budget of Frontex; takes note of Frontex's follow-up report to the 2022 discharge report which states that the agency does not intend to change the methodology used for these calculations; asks the Agency to report back to the discharge authority with a detailed explanation of the methodology used in these calculations;

AddedPerformance

Added61. Notes that the Common Approachon decentralised agencies introduces the concept of Key Performance Indicators (KPIs) aimed at improving performance tracking for the agencies;

Added62. Notes, in addition, that according to the roadmap developed by the Commission, the KPIs should be developed concerning the work of both the agency and its Director; notes, moreover, that the Commission also proposed that templates be developed for the annual work programme or the evaluation;

Added63. Points out that, according to the Roadmap, KIPs should be developed on an annual basis by the agencies and the Commission and therefore change year-to-year, making tracking the performance of the agency over a longer period difficult as some KPIs might not be followed over several years;

Added64. Recommends that the Agencies take action to meet outstanding or delayed indicators and regularly adjust their KPIs to enhance performance;

Added65. Underlines that the Commission’s guidelines for the KPIs for Directors of EU decentralised agencies focus entirely on the performance of Directors of the agencies, i.e., mainly related to budget and human resources management and are not used to giving an assessment of the results or of the efficiency and effectiveness of the operations under the agencies’ mandates;

Added66. Stresses, moreover, that, because there is no standard approach for presenting the KPIs in the Annual Activity Reports (AARs) of the agencies, it is difficult to have an overview of the status of the performance of each agency;

Added67. Underlines that based on Court’s conclusions, the KPIs do not contribute to tracking the performance of the agencies in terms of operations and financial and human resource management;

Added68. Calls for an independent performance review of all agencies to assess whether their activities effectively align with Union policy priorities and deliver tangible results; insists on the introduction of performance-based budgeting and efficiency benchmarks to ensure optimal resource allocation and impact-driven governance;

Added69. Welcomes the fact that the ECHA, in cooperation with the European Food Safety Authority (EFSA), has taken steps to promote the ‘one substance - one assessment’ principle to ensure greater consistency in the hazard and risk assessment of active substances; calls on the agencies to continue to promote cooperation with other EU agencies and international organisations and to foster dialogue with stakeholders and citizens;

Added70. Recalls the Unions ‘zero tolerance’ approach to Illegal, Unreported and Unregulated (IUU) fishing and the European Fisheries Control Agency (EFCA) vital contribution to the implementation of the common fisheries policy (CFP), in particular in relation to fisheries control and the fight against IUU fishing;

Added71. Stresses the primarily responsibility of Member States for the control of fishing activities, while the Agency’s tasks are limited to support and coordination, as well as to providing assistance to the Member States in this area; calls on the Agency to support Member States’ monitoring and identification of serious infringements concerning forced labour and to provide adequate training for inspectors on these serious infringements;

Added72. Calls on EUSPA to continue its efforts as a key contributor to the implementation of the EU Space Programme, reinforcing the Union’s industrial base, competitiveness and innovation; encourages prioritisation of European procurement, particularly in areas critical to the resilience, strategic autonomy and sovereignty of the Union; highlights the vital role of Galileo and its Public Regulated Service in Union security and defence, alongside the short-term benefits of GOVSATCOM and the long-term strategic value of IRIS2; stresses that Union defence and security capability initiatives should leverage the expertise and infrastructure of the Union’s space sector to avoid unnecessary duplication;

Added73. Takes note of the new interoperability roadmap; acknowledges that the new timeline for the roll-out and interoperability of Union information systems was necessary due to delays in development of the Entry/Exit System (EES), European Travel Information and Authorisation System (ETIAS) and European Criminal Records Information System on third-country nationals (ECRIS-TCN); underlines that swift, effective and reliable information exchange, in accordance with the applicable legislation, is critical for sustaining and strengthening the Union’s area of freedom, security and justice; in this regard acknowledges the work and improvements achieved by eu-LISA;

Added74. Notes the efforts of the Translation Centre for the Bodies of the European Union (‘the Centre’) to enable and promote multilingualism in the Union, for example as regards communications of the EU agencies and the development of terminology in specialised subject areas to improve the quality of translations; welcomes the setting up of a working group on artificial intelligence (AI) in June 2023 and the decision to take the work of that group further in a new advisory group on AI;

Added75. Calls on EFCA to support Member States’ monitoring and identification of serious infringements linked to the application of Article 90(2), point (p) of Regulation (EU) 2023/2842 concerning forced labour, and to provide adequate training for inspectors on these serious infringements;

Added76. Notes that, in 2023, EFCA reported 44 993 inspections (at sea and ashore), which led to the detection of suspected infringements in at least 4 230 of those inspections; notes that these data collectively represent a slight decrease in the total number of inspections (5 % less inspections compared with 2022), as well as a 18 % decrease in the total number of inspections where suspected infringements were detected; points out that inspections and other follow-up activities play a key role, not only in the proper management of fish stocks, but also in ensuring a level playing field for Union fishers;

Added77. Commends Eurojust’s efforts towards the digitalisation of justice, namely the implementation of a new Case Management System following the latest amendment to the Eurojust Regulation and the implementation of the new JITs Collaboration Platform; notes the role of Eurojust as the contact point for third countries and international organisations regarding ECRIS-TCN requests in the context of criminal proceedings;

Added78. Stresses the importance of Eurojust’s continued support to Ukraine, by the JIT investigating alleged core international crimes committed in Ukraine, by operating the Core International Crimes Evidence Database (CICED) to preserve, store and analyse evidence of core international crimes in a single, secure, central database, by ensuring a safe digital data transmission method for the evidence submission and its analysis; further welcomes the launching of the new International Centre for the Prosecution of the Crime of Aggression against Ukraine (ICPA) at Eurojust with the aim of supporting national investigations and agreeing on common investigative and prosecution strategies and by actively contributing to the work of the Seize and Freeze taskforce in order to ensure the effective implementation of Union sanctions across the European Union;

Added79. Highlights the role of FRA as a key guardian of fundamental rights and the rule of law, as enshrined in the Charter of Fundamental Rights and commends its support to ensure the respect, protection and fulfilment of fundamental rights in existing EU laws and policies in the field of equality and anti-discrimination, such as Union law and policies combating racism and antisemitism and islamophobia, supporting the collection of equality data and the implementation of equality and anti-racism strategies such as the national Roma strategic frameworks and providing input for to the mid-term review of the 2020–2025 LGBTIQ equality strategy, the protection of civil society and of at-risk human rights defenders, as well as supporting the revision of the victims’ rights directive, the Anti-racism Action Plan and the Union Strategy on combating antisemitism and fostering Jewish life and advising on the fundamental rights compliance regarding the development and use of AI systems and the implementation and use of Union funds;

Added80. Emphasises FRA’s guidance and engagement in the area of asylum and migration, borders and interoperability and its important focus on fundamental rights, Member States’ international obligations and Union human rights law in this area, including cooperation with the European Union Asylum Agency (EUAA) with a view to enhancing the understanding of the importance of guardians and legal representatives assisting unaccompanied children seeking international protection within the Union and the training provided to staff of Europol enhancing awareness and understanding of fundamental rights considerations in relevant operational contexts; welcomes FRA’s timely input on the implementation of the temporary protection directive in the context of refugees fleeing from Ukraine, on identifying the challenges with regard to the implementation of Union law on long-term residence, as well as on identifying the shortcomings in the visa code and the list of actions the Union and its Member States can take to reduce fatalities at sea;

Added81. Welcomes FRA's contribution to the evaluation of the European Border and Coast Guard Regulation (‘the EBCG Regulation’), participation in European Border Coast Agency (Frontex) management board meetings and co-chairing the Frontex Consultative Forum on Fundamental Rights and cooperation with the Fundamental Rights Office at Frontex;

Added82. Notes with satisfaction that FRA provided fundamental rights analysis and expertise to support the activities and work of other EU justice and home affairs (JHA) agencies, including the EUAA, Frontex, Europol, the European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA) and European Union Agency for Law Enforcement Training (CEPOL); welcomes FRA’s contributions in 2023 to advancing the respect for fundamental rights, including through guidance on Union funds and addressing challenges posed by new technologies; calls on FRA to determine the extent to which the rule of law and fundamental rights are intrinsically linked, and how its work could be incorporated or developed in synergy with that of the European Commission in the framework of the annual Rule of Law Report;

Added83. Commends Europol’s successful deployment of PERCI (EU Platform on Illegal Content Online), particularly with the full implementation of the European Data Protection Supervisor (EDPS) recommendations; appreciates the strong cooperation with EDPS and the joint working group established with Frontex to follow up on EDPS’ recommendations in relation to Frontex’s PeDRA (Processing personal data for risk analysis) programme where both agencies share a strong interest in protecting fundamental rights while advancing security;

Added84. Welcomes the implementation of the Europol Regulation as amended in 2022, especially the swift appointment of an FRO in January 2023, marking a significant step towards enhancing Europol’s commitment to human rights in its operations;

Added85. Highlights as regards EIGE, the importance of resuming actions related to the gender mainstreaming that did not achieve a 100 % success rate, particularly due to procedural reasons;

Added86. Acknowledges the importance of localised initiatives that strengthen health systems and environmental initiatives, while increasing collaboration with Member States and Agencies (ECDC, ECHA, EEA,EFSA, EMA); calls for improvement in the funding distribution approach, prioritising the reduction of administrative burdens and channelling resources directly to final recipients by simplifying procedures to enhance accessibility to economic players on the ground;

Added87. Notes that following the assessment by DG MOVE, which ensures supervision of the three Agencies, their 2023 performance of the three Agencies (EASA, EMSA, ERA) was in full alignment with the agreed objectives of the Commission: the regular monitoring and supervision activities did not identify any particular issues that could have a material impact on the assurance, furthermore, the reports from the external and internal auditors did not highlight any major issues that could raise additional concerns for DG MOVE;