FINAL ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR FINANCIAL STATEMENTS and REPORTS ON THE IMPLEMENTATION OF THE BUDGET

Transcription

1 The Hague, 10 July 2012 File no r2 ( v8A) FINAL ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR 2011 FINANCIAL STATEMENTS and REPORTS ON THE IMPLEMENTATION OF THE BUDGET

2 Table of contents Page APPENDICES TO THE BUDGETARY OUTTURN ACCOUNT 2 INTRODUCTION 3 CERTIFICATE OF THE ACCOUNTING OFFICER 4 1 FINANCIAL STATEMENTS Balance Sheet Economic Outturn Account Cash-Flow Statement (indirect method) Statement of changes in capital 9 2 ACCOUNTING PRINCIPLES, RULES AND METHODS Accounting principles Transactions and balances in foreign currency Use of estimates Depreciation rates 11 3 NOTES TO THE FINANCIAL STATEMENTS Notes to the balance sheet Tangible and Intangible fixed assets Long-term receivables Short-term pre-financing (given) Current receivables Sundry receivables Accruals and deferrals (assets) Cash and cash equivalents Provisions for risks and charges (long-term) Other long-term liabilities Provisions for risks and charges (short-term) Current payables Sundry payables Other accounts payable Accounts payable with consolidated EU entities Off balance sheet items Contingent assets Contingent liabilities Related party disclosures Highest grade disclosure Status of the Europol Pension Fund Significant disclosures Events after balance sheet date 22 4 REPORTS ON THE IMPLEMENTATION OF THE BUDGET Budget outturn account Reconciliation of economic and budget outturn accounts 24 1

3 APPENDICES TO THE BUDGETARY OUTTURN ACCOUNT Appendix 1 Budget implementation 2011 Appendix 2 Implementation of appropriations carried forward from 2010 to 2011 Appendix 3 Appropriations carried forward from 2011 to 2012 Appendix 4 Revenue Appendix 5 Budget transfers Appendix 6 Explanatory notes 2

4 INTRODUCTION Basis for preparation The final accounts of the European Police Office (Europol) include the financial statements and the budgetary implementation reports. They are drawn up under the responsibility of the Director in accordance with Article 83 of the Financial Regulation applicable to Europol. The financial statements comprise of the balance sheet, economic outturn account, cash flow table and statement of changes in capital. The notes to the financial statements supplement and comment on the information presented in the statements. The objective of the financial statements is to provide information about the financial position, performance and cash flows of Europol to demonstrate the accountability of the agency for the resources entrusted to it. The financial statements have been prepared in accordance with the Financial Regulation applicable to Europol and with the EC accounting rules and methods adopted by the European Commission s Accounting Officer following the principles of accrual-based accounting. The budgetary implementation reports are prepared on the basis of the modified cash-based accounting principle. Reporting entity At its meeting of 6 April 2009 the Justice and Home Affairs (JHA) Council adopted the Council Decision (2009/371/JHA), Europol into life as an agency of the European Union as from 1 st January 2010; replacing the provisions of the Convention based on Article K.3 of the Treaty on European Union, on the establishment of a European Police Office (Europol Convention). It should be borne in mind that, in accordance with Article 1(4) of the Europol Council Decision, the new Europol is the legal successor of Europol as set up by the Europol Convention. Mission Europol s mission is to support its Member States in preventing and combating all forms of serious international crime and terrorism. Its role is to help achieve a safer Europe for the benefit of all EU citizens by supporting EC law enforcement authorities through the exchange of analysis of criminal intelligence. Large-scale criminal and terrorist networks pose a significant threat to the internal security of the EU and to the safety and livelihood of its people. The biggest security threats come from terrorism, international drugs trafficking, trafficking in human beings, counterfeiting of the Euro currency and payment cards, fraud, corruption and money laundering as well as other activities related to the presence of organised crime groups in the economy. New dangers are also accumulating in the form of cybercrime, VAT fraud and other sophisticated crimes which abuse modern technology and the freedoms offered by the EU internal market. All of these have been declared priority areas by the EU s Council of Minsters. Vision Europol s vision is to contribute to a safer Europe by providing the best possible support to law enforcement authorities in the Member States. It will achieve this by delivering a unique set of operational services for the EU, developing as the principal: support centre for law enforcement operations; criminal information hub and centre for law enforcement expertise 3

5 CERTIFICATE OF THE ACCOUNTING OFFICER The final annual accounts of the European Police Office (Europol) for the year 2011 have been prepared in accordance with the Financial Regulation applicable to the general budget of the European Union and the accounting rules adopted by the Commission s Accounting Officer, as are to be applied by all the institutions, agencies and joint undertakings. I acknowledge my responsibility for the preparation and presentation of the final annual accounts of Europol in accordance with Article 61 of the Financial Regulation. I have obtained from the Authorising Officer, who certified its reliability, all the information necessary for the production of the final accounts that show Europol s assets and liabilities and the budgetary implementation. I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the final accounts, I have a reasonable assurance that the final accounts present a true and fair view of the financial position of Europol in all material aspects. Rebecca Topham Accounting Officer Europol Signed by the Accounting Officer on 10 July

6 1. FINANCIAL STATEMENTS 1.1. Balance Sheet BALANCE SHEET ASSETS Note Variation NON CURRENT ASSETS Intangible fixed assets ,291, ,125, ,165, Tangible fixed assets ,668, ,337, ,330, Land and buildings 10,318, ,318, Plant and equipment 339, , , Computer hardware 9,213, ,769, ,444, Furniture and vehicles 5,534, , ,163, Other fixtures and fittings 9,481, , ,361, Leasing Tangible fixed assets under construction 780, , Investments Guarantee Fund Investments in associates Interest in joint ventures Other investments Loans Loans granted from the budget Loans granted from borrowed funds Term deposits over 12 months Long-term pre-financing Long-term pre-financing LT pre-financing with consolidated EU entities Long-term receivables Long-term receivables , , LT receivables with consolidated EU entities TOTAL NON CURRENT ASSETS 39,966, ,463, ,502, CURRENT ASSETS Stocks Short-term pre-financing , , Short-term pre-financing - 150, , ST pre-financing with consolidated EU entities Short-term receivables 2,181, ,207, , Current receivables ,599, ,283, , Term Deposits between 3 months & 1 year - - LT receivables falling due within a year Sundry receivables , , , Other 476, , , Accrued income , , , Deferred charges , , , Deferrals and Accruals with consolidated EU entities Short-term receivables with consolidated EU entities Short-term Investments Cash and cash equivalents ,230, ,672, ,442, TOTAL CURRENT ASSETS 24,411, ,030, ,618, TOTAL 64,378, ,494, ,884,

7 BALANCE SHEET - LIABILITIES NOTE Variation Net capital ,846, ,905, ,941, Reserves Accumulated surplus/deficit ,905, ,154, ,751, Economic result of the year - profit+/loss ,941, ,751, ,190, Minority interest NON-CURRENT LIABILITIES 794, ,116, , Employee benefits Provisions for risks and charges , , , Financial liabilities Borrowings Held-for-trading liabilities Other long-term liabilities , , , Other long-term liabilities 664, , , Other LT liabilities with consolidated EU entities Pre-financing received from consolidated EU entities Other LT liabilities from consolidated EU entities TOTAL 46,640, ,022, ,618, CURRENT LIABILITIES 17,737, ,472, ,265, Provisions for risks and charges , ,225, ,441, Financial liabilities Borrowings falling due within the year Held-for-trading liabilities due within the year Other current financial liabilities Accounts payable 16,954, ,246, ,707, Current payables , ,833, ,998, Long-term liabilities falling due within the year Sundry payables ,520, ,705, , Other ,271, ,055, ,216, Accrued charges 6,241, ,034, ,206, Deferred income 30, , , Deferrals and accruals with consolidated EU entities Accounts payable with consolidated EU entities ,327, ,652, ,675, Pre-financing received from consolidated ,820, ,224, ,596, EU entities Other accounts payable against consolidated , , , EU entities TOTAL CURRENT LIABILITIES 17,737, ,472, ,265, TOTAL 64,378, ,494, ,884,

8 1.2. Economic Outturn Account ECONOMIC OUTTURN ACCOUNT Variation Subsidy from the Commission 76,530, ,452, ,921, Income taxes 1 306, ,428, ,121, Other income fixed assets 2 24,836, ,836, Other operating revenue 823, ,030, ,207, TOTAL OPERATING REVENUE 102,496, ,911, ,585, Administrative expenses -64,338, ,260, ,921, All Staff expenses -48,725, ,924, ,199, Fixed asset related -6,773, ,523, ,250, expenses Other administrative -8,840, ,813, ,972, expenses Operational expenses -13,210, ,897, ,312, Other operational -13,210, ,897, ,312, expenses TOTAL OPERATING -77,549, ,157, ,391, EXPENSES SURPLUS/DEFICIT FROM 24,947, ,753, ,194, OPERATING ACTIVITIES Financial revenue Financial expenses -6, , , Movement in pensions (- expense, + revenue) Share of net surpluses or deficits of associates and joint ventures accounted for using the equity method SURPLUS/ DEFICIT FROM NON OPERATING ACTIVI- TIES -6, , , SURPLUS/DEFICIT FROM 24,941, ,751, ,190, ORDINARY ACTIVITIES Minority interest Extraordinary gains (+) Extraordinary losses (-) SURPLUS/(DEFICIT) FROM EXTRAORDINARY ITEMS ECONOMIC RESULT OF THE YEAR 24,941, ,751, ,190, Taxes from Europol Staff still recruited under Europol s old Staff Regulation 2 This relates to the donation of fixed assets from the Host State when Europol moved to its new headquarters. See notes to the balance sheet for more detail. 7

9 1.3. Cash-flow Statement (indirect method) Cash-flow from ordinary activities Surplus/deficit from ordinary activities 24,941, ,751, Operating activities Adjustments Amortization (intangible fixed assets) + 1,521, ,217, Depreciation (tangible fixed assets) + 4,819, ,263, Increase/(decrease) in Provisions for risks and liabilities -1,726, ,640, Increase/(decrease) in Value reduction for doubtful debts - - (Increase)/decrease in Stock - - (Increase)/decrease in Long term Pre-financing - - (Increase)/decrease in Short term Pre-financing 150, , (Increase)/decrease in Long term Receivables -6, (Increase)/decrease in Short term Receivables 26, ,207, (Increase)/decrease in Receivables related to consolidated EU entities - - Increase/(decrease) in Other Long term liabilities -37, , Increase/(decrease) in Accounts payable -967, ,594, Increase/(decrease) in Liabilities related to consolidated EU entities 5,675, ,652, Other non-cash movements -1,171, ,780, Net cash-flow from operating activities 33,223, ,682, Cash-flow from investing activities Increase of tangible and intangible fixed assets (-) -36,000, ,056, Proceeds from tangible and intangible fixed assets (+) 335, , Net cash-flow from investing activities -35,665, ,010, Increase/(decrease) in Employee benefits - - Net increase/decrease in cash and cash equivalents -2,442, ,672, Cash and cash equivalents at the beginning of the period 24,672, Cash and cash equivalents at the end of the period 22,230, ,672, Capitalisation of internally-generated intangible assets (net amount) 8

10 1.4. Statement of changes in capital Capital Accumulated Surplus/Deficit Economic result of the year Capital (total) Balance as of 31 December ,154, ,751, ,905, Fair value movements Movement in Guarantee Fund reserve Allocation of the Economic Result of Previous Year Amounts credited to Member States ,751, ,751, Economic result of the year - 24,941, ,941, Other Balance as of 31 December ,905, ,941, ,846,

11 2. ACCOUNTING PRINCIPLES, RULES AND METHODS 2.1. Accounting principles The revised provisional annual accounts of the Office have been prepared in accordance with Articles inclusive of the Financial Regulation applicable to Europol as of 30 March 2010, in accordance with the generally accepted accounting principles specified in the detailed rules for implementing the general Financial Regulation, namely: (a) going concern basis; (b) prudence; (c) consistent accounting methods; (d) comparability of information; (e) materiality; (f) no netting; (g) reality over appearance; (h) accrual-based accounting and according to the accounting rules and methods adopted by the Commission s Accounting Officer (Article 85 of Europol s Financial Regulation). The accounting system of Europol comprises general accounts and budget accounts. These are kept in Euro on the basis of the calendar year Transactions and balances in foreign currency Foreign currency transactions are converted into Euro using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the economic outturn account Use of estimates In accordance with generally-accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management. Significant estimates include, but are not limited to, accrued income and charges, provisions, contingent assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known. 10

12 2.4. Depreciation rates The depreciation rates used were as follows: Asset type Depreciation rate Intangible fixed assets Software for personal computers and servers 25% Tangible fixed assets Buildings 4% Plant and equipment Scientific and laboratory equipment 25% Tools for industry and workshops 12.5% Lifting and mechanical handling equipment for public works, prospecting and mining 12.5% Control and transmission devices, motors, compression, vacuum and pumping equipment 12.5% Equipment for the supply and treatment of electric power 12,5%, 25% Specific electric equipment 25% Furniture and vehicles Office, laboratory and workshop furniture 10% Electrical office equipment, printing and mailing equipment 25% Print shop and post room equipment 12.5% Equipment and decorations for garden, kitchen, canteen, restaurant, crèche and school 12.5% Motorised outdoor equipment 25% Specific furniture and equipment for schools, crèches and childcare centres 25% Furniture for restaurant/cafeteria/bar area 10%, 12,5% Cash registers and card acceptor devices 25% Transport equipment (vehicles and accessories) 25% Computer hardware Computers, servers, accessories, data transfer equipment, printers, screens 25% Copying equipment, digitising and scanning equipment 25% Other fixtures and fittings Telecommunications equipment 25% Audiovisual equipment 25% Computer, scientific and general books, documentation Computer books, CDs, DVDs 33% Scientific books, general books, CDs, DVDs 25% Health, safety and protective equipment, medical equipment, 12.5% Medical and nursing equipment 25% Other 10% 11

13 3. NOTES TO THE FINANCIAL STATEMENTS 3.1. Notes to the balance sheet Tangible and intangible fixed assets Europol signed a housing agreement with the Host State in March 2011 and moved to its new headquarters (NHQ) in June The NHQ was equipped and modified by the Host State to meet Europol s requirements. As part of the housing agreement, the ownership of these user-related items was moved over to Europol. Therefore the acquisition date of the goods as referred to in EC Accounting rule 17 and its interpretation published by EC Accounting corresponds to the signature date of the agreement. Europol started using these assets in June 2011 after its move to the new premises. The depreciation has therefore been adjusted in accordance with EC Accounting rule 7. The table below shows how these assets were reflected in Europol s accounts: Gross value Total cost of the User related items 26,446,199 Less Europol contribution -1,610,000 Donation from the Host State / revenue to Europol 24,836,199 Gross value Depreciation Net carrying amount Tangible assets 26,347,880 1,672,332 24,675,548 Intangible assets 37,494 5,468 32,026 Assets not capitalised 60,825 26,446,199 As a result of the move to the NHQ there was a high turnover of assets within Europol during the year This included a higher-than-normal frequency of disposals taking place. Many existing materials did not carry the requisite specifications for the NHQ and were disposed as a result. In 2011 Europol had 13 disposal procedures. These disposal procedures can be divided into three categories: Obsolete equipment - so no longer in use by Europol Regularisation following the result of the inventory as at the end of 2010 Administrative corrections The total acquisition value of all disposed items ( 2,350,428.06) resulted in a net write-off of 233, From this it can be concluded that a large portion of the disposed items were already fully depreciated. Details of the total tangible assets can be found on the next page. 12

14 TANGIBLE Buildings Plant and equipment Computer hardware Furniture and vehicles Other fixtures and fittings Under construction Total Gross carrying amounts from , ,748, ,264, , ,070, Additions 10,584, , ,631, ,902, ,158, , ,424, Disposals -230, ,377, , , ,216, Transfer to intangibles , , , , Gross carrying amounts ,584, , ,956, ,670, ,622, , ,073, Accumulated depreciation and impairment from , ,979, , , ,732, Depreciation -265, , ,045, , , ,819, Disposals - 228, ,149, , , ,903, Transfer to intangibles - 110, , , , Accumulated depreciation and impairment , , ,742, ,136, ,141, ,405, Net carrying amounts ,318, , ,213, ,534, ,481, , ,668,

15 INTANGIBLE Computer software Other Under Construction Total Gross carrying amounts from ,541, , , ,813, Additions 1,548, , ,576, Disposals -3, , , Transfer from tangibles 205, , Other changes 1,517, , ,268, Gross carrying amounts ,809, , ,837, Accumulated amortization and impairment from ,687, ,687, Amortization -1,511, , ,521, Disposals , , Transfer from tangibles -243, , Other changes -96, , Accumulated amortization and impairment ,540, , ,545, Net carrying amounts ,269, , ,291, In accordance with Accounting Rule 6 regarding internally-developed intangible assets, Europol set its threshold at 200,000. Since 2010, in agreement with the European Court of Auditors, Europol has adjusted its approach to the capitalisation of internally-developed intangible assets. Previously a project was defined as a whole according to the platform in question, and could be spread over multiple phases. This approach has changed in 2011 so that a phase is now considered as an individual project for the purposes of this assessment. This will deliver a more accurate representation of the internally-developed fixed assets to the reader of the accounts. As a result, the project placed to work in progress at the end of 2010 can now be considered as delivered in This is therefore transferred to the manual intangible assets computer software account and depreciated accordingly. Taking these new parameters into account for the ICT projects running in the year 2011, there are three in-house projects capitalised as at All three were delivered in details can be found on the next page. Research and development cost Europol has used estimations based on this time-tracking system to divide the internal hours worked into the research phase and development phase of a project. The system has given the information on worked hours per unit per project. The linking to a certain phase has been made based on the function of the unit concerned e.g. hours worked in C3 IT Solution and engineering unit has been recorded under the development phase, and hours worked in C4 Programmes and architecture unit has been recorded under the research phase. The result in the 2011 accounts is: Not capitalised cost Research cost Not capitalised development cost Cost of the year 137, ,

16 In-house ICT projects capitalised as at Project name Objective 4 Status Amount capitalised (gross) European Platform for Experts v2.0 To release a new version of the system that implements functionalities that have already been identified by users, as well as enhancements that are necessary to support further platforms to be rolled out in The system was successfully developed and released into production in December As the project is live the development cost is transferred to the Intangible assets Computer software account and depreciated as from the start of the month following the delivery date. 309,018 Identity Access Management v2.5 To enhance the IAM functionalities to support access to Europol resources/ applications by internal and external (Member States) users. This enhancement includes new functionalities, additional change requests and support for connected systems. The system was successfully developed and released into production in October As the project is live the development cost is transferred to the Intangible assets Computer software account and depreciated as from the start of the month following the delivery date. 465,492 SIENA v2.1 To develop SIENA functionality in line with the strategic business perspective and the envisaged functionalities for phase 2. The system was successfully developed and released into production in November As the project is live the development cost is transferred to the Intangible assets Computer software account and depreciated as from the start of the month following the delivery date. 494,126 TOTAL 1,268,636 4 As per the ICT Work Plan

17 Long-term receivables The total amount relates to a guarantee/deposit paid for Europol s postal services Short-term pre-financing All payments made during 2011 were settled before the year-end. Thus no outstanding amount remained on the balance sheet Current receivables TYPE Open debtors prior to , Open debtors (customers) 4, , Open debtors (member states) 808, , Open debtors (non-member states) 10, , Open debtors (Public bodies) 12, VAT and other taxes 761, , TOTAL 1,599, ,283, Sundry receivables Of the 105, ( 47, for 2010), more than 85% relates to amounts receivable from Staff (open debit notes, salary and mission advances) Accruals and deferrals (assets) A large proportion of the amount for accrued income ( 281K) relates to expenditure relating to the EBDS Grant pending validation by the European Commission. The rest relates to debit notes prepared in 2012 relating to Similarly the amount for deferred charges relates to credit notes paid in 2011 relating to Cash and cash equivalents These relate only to bank accounts as follows: TYPE Europol current accounts 21,502, ,056, Unemployment Fund 402, ,453, Local staff pension Fund 325, , TOTAL 22,230, ,672,

18 Provisions for risks and charges (long-term) Balance at Additions Used Unused Transfer to Shortterm Balance at ,000 31, ,900-74, , , Just over 90% of this amount is linked to staff-related litigation cases and the rest to a provision for a doubtful debt from Other long-term liabilities DESCRIPTION Unemployment fund liability towards staff 5 338, , Local staff pension contribution 325, , TOTAL 664, , The difference between the amount shown above for the Unemployment fund liability and the bank account balance is the calculation for the short-term liability (see below) Provisions for risks and charges (short-term) DESCRIPTION Balance due back to Member States 6 369, Balance Host State regarding the carry forward from 2010 to , Staff litigation cases transferred from long-term 102, Provision for refused salary increase of 1.7% 185, Unemployment liability towards staff 63, TOTAL 783, The total amount of 2,225, for 2010 was the net asset of the former Europol (prior to 2010) due back to Member States and the Host State. 5 Figure based on worst-case scenario 6 File no this amount involves six Member States 7 File no

19 Current payables DESCRIPTION Amounts payable - vendors 3,912, ,016, Amounts payable - member states 32, , Amounts payable public bodies 7, , Invoices / credit notes pending verification -4,117, ,646, Sale of public relations items pending verification TOTAL -164, ,833, Sundry payables DESCRIPTION Fixed assets goods received 2,455, ,837, Pre-financing received from Member States re UMF2 45, Grant Salary-related 8 19, , Other - 849, TOTAL 2,520, ,705, Other accounts payable DESCRIPTION Accrued charges 9 4,930, ,930, Accrual for untaken leave at year-end 1,310, ,089, Accrual for unpaid overtime at year-end - 14, Deferred income 10 30, , TOTAL 6,271, ,055, Mainly relating to the collection of overpaid allowances at the year-end and thus only recognised in the P+L in Invoices (credit notes) received/paid in 2012 relating to Receivables during 2011 to be regularised in

20 Accounts payable with consolidated EU entities DESCRIPTION Surplus from EC subsidy 11 6,938, ,150, Balance on pre-financing relating to grants 882, ,073, Accounts payable other Commission , , Accounts payable other Translation Centre 179, , Accounts payable other Council of the EU 205, , TOTAL 8,327, ,652, Off balance sheet items Contingent assets There are no contingent assets to be disclosed for Contingent liabilities Legal cases Aside from legal cases provided for in the balance sheet, there are four pending court cases (staff only) where either no amount can be calculated at this moment in time, or the likelihood of the liability materialising is low. These can be summarised as follows: Judgments 2009 one case closed but there is the possibility a request for the payment of legal costs may still be received Judgments 2011 one case for material damage awaiting submission of conclusive evidence Judgments (expected) 2013 One case for the legal costs of the other party during appeal proceedings and one case for the difference in salary grades plus legal costs. Application lodged with the General Court of the EU - On 7 February 2012, Europol received an application lodged with the General Court of the EU in Luxembourg by two different European Dynamics (ED) corporate entities. The application is contesting a decision of Europol communicated on 22 November 2011 to exclude ED from the tender for the provision of an Enterprise Content Management System and Corporate Intranet (D/C3/1104). The basis for the exclusion was that the tender did not comply with two mandatory technical criteria. Europol intends to submit defences in this action. At this stage ED is requesting annulment of the exclusion decision and legal costs. 11 Budgetary outturn account 12 Interest earned on bank accounts 19

21 Dilapidation costs A calculation was made internally at Europol on the legal obligation established by the lease agreements to bring back to the original condition the office space under Europol s use (dilapidation). For 2011 two such agreements were in place as follows: Agreement Dilapidation calculation Headquarters The Netherlands 205,146 Disaster recovery site Austria 197,500 Total 402, Related party disclosures Highest grade disclosure Highest grade description Grade Number of persons in this grade Director (former Europol salary grade) 1 1 Deputy Director AD Status of the Europol Pension Fund (EPF) Article 37, Appendix 6 of the Europol Staff Regulations (ESR), established under the Europol Convention, states that an independent provisional Fund shall be established, for the sole purpose of financing, and execution of the payments, under the Europol pension scheme. This Fund, as confirmed by the Council on 28 June 2011, is managed externally and adheres to rules as laid down by the Council by means of the Council Act of 12 March 1999, as later amended by the Council Decision of 28 June Article 12b of said Council Decision foresees that Europol shall cover any shortfall in case the assets of the Europol Pension Fund are not sufficient.. Consequently the financial health of the Europol Pension Fund has to be monitored regularly. This note to the final annual accounts of Europol 2011, therefore, is to disclose the financial health of the Europol Pension Fund (EPF) without this leading to monetary changes or consolidation entries in the Europol balance sheet as at The final annual accounts of the EPF 2011 were adopted by the Management Board of the EPF on after an audit by an independent private audit company and a dedicated audit mission of the ECA. Both audits provided in a positive assessment whether the provisional accounts presented provided a true and fair view of the EPF s financial situation as at At the fund's coverage ratio, demonstrating the ability of the EPF to pay the total liabilities was 174%. The total available assets were reported at 16.6M whereas the total of the technical provision for pension liabilities amounted to 9.5M. Due to the transfer of Europol staff towards the EC staff regime, in accordance with Article 57 of the ECD, at the year end 2011 only 9 active contributors to the EPF remained, whereas at the end of 2009 this figure was still 431. The number of people awaiting the payment of their actuarial equivalent of retirement pension entitlement was 39, whereas the number of (deferred) pensioners requiring a monthly payment of retirement pension was 17. All pension costs up to which were related to the aforementioned 3 different categories of Europol staff members are included in the technical provision for pension liabilities or under other accounts payable. 20

22 The funding mainly stems from the employer and employee contribution to the EPF which is 16.5% and 8.25% respectively of the basic salary. The total employer contributions paid via the Europol budget during 2011 were approximately 0.2M. Other extra revenue was gained by the fund's portfolio investments, risk reinsurance policies or other smaller benefits (e.g. bank interest). Most of the assets of the Fund are held in bank accounts. During 2011 an amount of 1.4M was deducted from the accumulated free reserve, amounting to 7.1M at This provisional balance over the year 2011 is contradicting the outlook 2011 as previously provided by the EPF Management Board in the Europol annual accounts 2010 which reported an expectation to obtain a positive balance over Please note that the provisional result for 2011 has a negative balance due to 5 main reasons: As from the third quarter 2011 the EPF used for the first time the more expensive EU mortality tables to calculate the pension entitlements; As from the third quarter 2011 the EPF eliminated the difference in approach for Bold, Non-Bold and Bodies & Organs staff members as in reality all staff could opt for the same entitlement. It was therefore opted to provide in the most costly scenario for all staff still entitled to a pension entitlement; 3 ex-staff members severance grants who were previously recognised as an account payable, though since 2009 never paid, now are returned to the Technical Provision Pension Liabilities at the higher cost of the transfer out of the actuarial equivalent of accrued pension rights; 11 ex-staff members have made use of the severance grant repayment facility launched and concluded by the Europol Pension Fund s administration during the fourth quarter These 11 ex-staff members have again been added at the higher cost to the Technical Provision Pension Liabilities; An extra worst case provision has been provided due to an amicable settlement achieved between Europol and one invalidity pensioner for which the Europol Pension Fund needs to assure the payments. The EPF s administration would like to caution the reader that though the provisional balance over 2011 is negative this is not caused by structural problems in the EPF. The EPF expects that due to the incorporation of the 5 aforementioned elements the situation at reflects the worst case scenario. Hence if such a worst case scenario does not materialise, the gains will automatically positively influence the future reports. The assessment contained in the EPF Annual Report 2010 already indicated that on 1 July 2015 the last contract of employment under the Europol Staff Regulations will expire, then leading to a demographic population within the EPF which is limited to (deferred) pensioners only. With this in mind, on the way forward, it appears advisable to consider integrating the EPF into the annual accounts of Europol. In this context, however, it is important to note that Article 13 (1) of the Council Decision of 28 June 2011 (amending the rules on the EPF) describes that the fund has been established for an undetermined period. It may only be dissolved by unanimous decision of the Council. Such decision shall be taken on the basis of a proposal from the Management Board of Europol, submitted after hearing the Board (of the EPF). The first steps were made by Europol during 2011 to allow for the preparation of such a Council Decision. After careful consideration of all aspects and facts, particularly also the fact that there is no decision yet on the use of the fund's free reserve and the question to whom this money finally belongs, Europol decided that a consolidation would be inadequate and would possibly impair a true and fair view on Europol's financial situation. Accordingly Europol decided that a comprehensive disclosure of the situation in the notes to the annual accounts for the financial year 2011, referring also to the EPF's free reserve, is considered to be appropriate. 21

23 3.4. Significant disclosures Services-in-kind - In accordance with EC Accounting rule 17, Europol discloses its free use of the office building (including parking facilities) during the year offered by the Host State. The estimated amount for the year 2011 is 10.4M representing ten twelve s of the total per annum as Europol only had an agreement with the Host State in place from 1 March For the two months prior to this involving Europol s old headquarters, there was no lease agreement in place. This service-in-kind is, in principle, offered until the end of February 2031 (20-year lease agreement). Commitments against appropriations not yet consumed (RAL) the total amount was 16,779, Events after balance sheet date No material issues came to the attention of the accounting officer of Europol or were reported to her that would require separate disclosure under this section. 22

24 4. REPORTS ON THE IMPLEMENTATION OF THE BUDGET 4.1. Budgetary outturn Commission subsidy + 83,469, ,724, Other subsidies and grants + 507, ,233, Host State contribution + 122, ,358, Other revenue + 380, , Proceeds of taxation of staff + 291, ,427, Budget Expenditure Title I: Staff TOTAL REVENUE (a) 84,771, ,830, Payments - 51,030, ,837, Appropriations carried over - 685, , Title II: Administrative Expenses Payments - 4,100, ,266, Appropriations carried over - 5,424, ,652, Title III: Operating Expenditure Payments - 9,962, ,168, Appropriations carried over - 10,668, ,871, Adjustments and corrections TOTAL EXPENDITURE (b) 81,872, ,610, OUTTURN FOR THE FINANCIAL YEAR (a-b) 2,898, ,220, Cancellation of unused payment appropriations carried over from previous year + 1,951, Adjustment for carry-over from the previous year of appropriations available at arising from assigned revenue + 1,993, Exchange differences for the year (gain +/loss -) +/- -10, , Correction of budget outturn , BALANCE OF THE OUTTURN ACCOUNT FOR THE FINANCIAL YEAR 6,938, ,218, Balance year N-1 + 1,218, Balance from year N-1 reimbursed to the Commission - 1,218, FINAL BALANCE OF THE OUTTURN ACCOUNT FOR THE FINANCIAL YEAR 6,938, ,218, not included in the budget outturn: Interest generated by 31/12/N on the Commission balancing subsidy funds and to be reimbursed to the Commission (liability) + 159, , The budgetary outturn (surplus) of 6.94M 14 consists of an amount of 4.61M of the 2011 budget which has not been used or carried-forward, an amount of 1.95M of the carry-forward budget from 2010 to 2011 that has lapsed, an amount of 105K has been added due to a correction of 2010 budget outturn (not cashed amount for the EEODN grant), exchange rate differences (almost - 11K), a correction for lapsed Host State appropriations (- 31K) and an amount of more than 314K which has been cashed above the estimated budget for chapter 92 (Other revenue). Corrections are provided in the outturn account to ensure that contributions from the Member States and the Host State and unsettled grants from the Commission initiated prior to 2010 are excluded from the result which will need to be balanced with the Commission. 13 The 2010 result was understated for an amount of 105, This was a result of incorrectly including an amount related to assigned revenue (grant from the Commission) in the budgetary outturn table. 14 This amount will be paid back to the Commission during

25 4.2. Reconciliation of economic and budget outturn accounts Europol s financial statements are prepared on an accrual-basis by which transactions are recorded in the period to which they relate. The result for the year using this basis is indicated in the economic outturn account. However, Europol uses a modified cash accounting system for preparing the budget outturn accounts. In this system, only payments made and the revenue received in the period as well as the carry-forward of appropriations are recorded. The difference between the budgetary outturn and the economic outturn is explained as follows: Economic result (- for loss) + 24,941, Adjustment for items included in the economic but not in budgetary outturn Adjustments for accrual cut-off (reversal N-1) - 4,988, Adjustments for accrual cut-off (cut-off N) + 3,974, Unpaid invoices at year-end, but booked in charges + 282, Depreciation of intangible and tangible assets * + 6,437, Provisions * + 417, Recovery Orders issued in 2011 booked to revenue, but not yet cashed - 63, Pre-financing received in previous year and cleared in the year - 311, Payments made from carry-forward of payment appropriations + 18,621, Host State donation of fixed assets - 24,775, Internally-developed intangible assets - 1,268, Manual adjustment fixed assets - 291, Debit note offsetting from previous year + 23, Host State adjustment for exceptional carry-forward , Credit notes not included in budgetary outturn - 1,926, Exchange rate differences Adjustment for items included in the budgetary but not in economic outturn Asset acquisitions (less unpaid amounts) - 1,900, New pre-financing received and remaining open in the year + 507, Budgetary recovery orders issued before 2011 and cashed in the year + 55, Budgetary recovery orders issued in 2011 on balance sheet accounts (not revenue or expense accounts) and cashed Payment appropriations carried over to ,779, Cancellation of unused carried-forward payment appropriations from previous year + 1,951, Adjustment for carry-forward from the previous year of appropriations available at arising from assigned revenue + 1,993, Invoices included in economic outturn previous year - 52, Correction of budgetary outturn previous year + 105, total 6,996, Budgetary result (+ for surplus) + 6,937, Difference not explained * Impact of the year 15 = donation from Host State 24.8M, less assets not capitalised of 61K 16 Amount considered immaterial 24

26 Budget implementation 2011 Europol Public Information Item Heading Final Budget (a) Commitments (b) Payments (c) Commitment rate (d=b/a) Payment rate (e=c/a) Carry forward to 2012 Art 10(4/7) (f=b-c) Staff expenditure not to be carried forward Art 10(2) (g=b-c) Not used budget (h=a-b) FINAL OUT- TURN (i=e+f) Basic salaries Family allowances TITLE 1 - STAFF Expatriation and foreign-residence allowances Contract staff Seconded national experts (non-operational) Insurance against sickness 1121 Insurance against accidents and occupational disease 1122 Insurance against unemployment Childbirth and death allowances and grants Travel expenses for annual leave Shift work and standby duty Expenditure related to Recruitment 1151 Travel expenses on taking up duties and at end of contract 1152 Installation, resettlement and transfer allowances for temporary agents 1153 Removal expenses for temporary agents 1154 Temporary daily subsistence allowances for temporary agents 1160 Salary weightings Europol Staff Local Staff Pensions under Europol convention Administrative Missions Chapter 1 1 Total Chapter 1 2 Total 30,740, ,740, ,457, % 99.1% - 282, ,457, ,226, ,226, ,173, % 98.8% - 52, ,173, ,582, ,582, ,526, % 98.8% - 55, ,526, ,005, ,005, ,985, % 99.5% - 19, ,985, , % 11.3% ,069, ,069, ,054, % 98.7% - 14, ,054, , , , % 92.1% - 19, , , , , % 98.1% - 7, , , , , % 71.4% - 2, , , , , % 99.4% - 4, , , , , % 98.5% - 2, , , , , % 97.9% - 5, , , , , % 18.7% - 8, , , , , % 94.4% - 6, , , , , % 64.4% - 17, , , , % 6.9% - 9, , , , % 97.6% - 23, , ,746, ,746, ,732, % 99.2% - 13, ,732, , , , % 99.6% - 1, , , , , % 99.0% - 2, , ,056, ,055, ,505, % 98.9% - 550, ,505, , , , % 78.0% 35, , , , , , % 78.0% 35, , , APPENDIX 1 25

27 Item Heading Final Budget (a) Europol Public Information Commitments (b) Payments (c) Commitment rate (d=b/a) Payment rate (e=c/a) Carry forward to 2012 Art 10(4/7) (f=b-c) Staff expenditure not to be carried forward Art 10(2) (g=b-c) Not used budget (h=a-b) FINAL OUT- TURN (i=e+f) Catering costs Restaurant equipment Medical service Sports activities Social events Staff Committee Other sociomedical expenditure Chapter 1 3 Total Training of staff Chapter 1 4 Total PMO Management costs Supplementary clerical and interim services Other external services Chapter 1 5 Total General entertainment and representation expenses Chapter 1 6 Total TITLE 1 TOTAL 738, , , % 53.5% 73, , , , , , % 80.5% 2, , , , , , % 21.5% 157, , , , , % 0.0% 68, , , , , % 54.7% 34, , , , , , % 21.3% 1, , , % 0.0% ,236, , , % 46.3% 337, , , , , , % 48.7% 100, , , , , , % 48.7% 100, , , , , , % 96.1% 8, , , , , , % 86.2% , , , , , % 51.4% 149, , , , , , % 72.5% 158, , , , , , % 43.5% 53, , , , , , % 43.5% 53, , , ,740, ,266, ,030, % 96.8% 685, , , ,716, TITLE 2 - OTHER ADMINISTRATIVE EXPENDITURE Insurance of building(s) 19, , , % 90.4% - - 1, , Water gas electricity and local taxes 1,044, , , % 61.9% 170, , , Cleaning and treatment of waste 703, , , % 57.4% 41, , , Maintenance installations and alterations 566, , , % 15.8% 454, , , Security equipment 196, , , % 25.0% 82, , , Security services 81, , , % 10.8% 3, , , Other building related expenditure 960, , , % 0.4% 951, , , Chapter 2 0 Total 3,569, ,922, ,218, % 34.1% 1,704, , ,922,