Bijlagen bij COM(2013)558 - Jaarrekeningen van de Europese Commssie 2012 - Hoofdinhoud
Dit is een beperkte versie
U kijkt naar een beperkte versie van dit dossier in de EU Monitor.
| dossier | COM(2013)558 - Jaarrekeningen van de Europese Commssie 2012. |
|---|---|
| document | COM(2013)558  |
| datum | 23 juli 2013 |
Interest on pre-financing is recognised as it is earned in accordance with the provisions of the relevant agreement. An estimate of the accrued interest revenue, based on the most reliable information, is made at the year-end and included in the balance sheet.
1.5.8 Receivables
Receivables are carried at original amount less write-down for impairment. A write-down for impairment of receivables is established when there is objective evidence that the European Union will not be able to collect all amounts due according to the original terms of receivables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance. A general write-down, based on past experience, is also made for outstanding recovery orders not already subject to a specific write-down. See note 1.5.14 below concerning the treatment of accrued income at year-end.
1.5.9 Cash and cash equivalents
Cash and cash equivalents are financial instruments and defined as current assets. They include cash at hand, deposits held at call with banks, other current highly liquid investments with original maturities of three months or less.
1.5.10 Employee benefits
Pension obligations
The European Union operates defined benefit pension plans. Whilst staff contribute from their salaries one third of the expected cost of these benefits, the liability is not funded. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date. The defined benefit obligation is calculated by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the statement of financial performance. Past-service costs are recognised immediately in statement of financial performance, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.
Post-employment sickness benefits
The European Union provides health benefits to its employees through the reimbursement of medical expenses. A separate fund has been created for the day-to-day administration. Both current employees, pensioners, widowers and their beneficiaries benefit from the system. The benefits granted to the "inactives" (pensioners, orphans, etc.) are classified as "Post-Employment Employee Benefits". Given the nature of these benefits, an actuarial calculation is required. The liability in the balance sheet is determined on a similar basis as that for the pension obligations (see above).
1.5.11 Provisions
Provisions are recognised when the European Union has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenses expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (“expected value” method).
1.5.12 Financial liabilities
Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities carried at amortised cost (borrowings). Borrowings are composed of borrowings from credit institutions and debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred, then subsequently carried at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the statement of financial performance over the period of the borrowings using the effective interest method.
They are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. In the case of loans granted on borrowed funds, the effective interest method may not be applied to loans and borrowings, based on materiality considerations. The transaction costs incurred by the European Union and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.
Financial liabilities categorised at fair value through profit or loss include derivatives when their fair value is negative. They follow the same accounting treatment as financial assets at fair value through profit or loss, see note 1.5.5.
1.5.13 Payables
A significant amount of the payables of the EU are not related to the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding. They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.
Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the European Union.
1.5.14 Accrued and deferred income and charges
According to the European Union accounting rules, transactions and events are recognised in the financial statements in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Commission which aim at ensuring that the financial statements reflect a true and fair view.
Revenue is also accounted for in the period to which it relates. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the EU or a contractual agreement exists (i.e. by reference to a treaty), an accrued income will be recognised in the financial statements.
In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.
1.6 STATEMENT OF FINANCIAL PERFORMANCE
1.6.1 Revenue
Non-exchange revenue
This makes up the vast majority of the EU's revenue and includes mainly direct and indirect taxes and own resource amounts. In addition to taxes the European Union may also receive payments from other parties, such as duties, fines and donations.
GNI based resources and VAT resources
Revenue is recognised for the period for which the European Commission sends out a call for funds to the Member States claiming their contribution. They are measured at their “called amount”. As VAT and GNI resources are based on estimates of the data for the budgetary year concerned, they may be revised as changes occur until the final data are issued by the Member States. The effect of a change in estimate is included when determining the net surplus or deficit for the period in which the change occurred.
Traditional own resources
Receivables and related revenues are recognised when the relevant monthly A statements (including duties collected and amounts due that are guaranteed and not contested) are received from the Member States. At the reporting date, revenue collected by the Member States for the period but not yet paid to the European Commission is estimated and recognised as accrued revenue. The quarterly B statements (including duties neither collected nor guaranteed, as well as guaranteed amounts that have been contested by the debtor) received from the Member States are recognised as revenue less the collection costs to which they are entitled (25%). In addition, a value reduction is recognised for the amount of the estimated recovery gap in the statement of financial performance.
Fines
Revenue from fines is recognised when the EU's decision imposing a fine has been taken and it is officially notified to the addressee. If there are doubts about the undertaking's solvency, a value reduction on the entitlement is recognised. After the decision to impose a fine, the debtors have two months from the date of notification:
– either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU;
– or not to accept the decision, in which case they lodge an appeal under EU law.
However, even if appealed, the principal of the fine must be paid within the time limit of three months laid down as the appeal does not have suspensory effect (Article 278 of the EU Treaty) or, under certain circumstances and subject to the agreement of the Commission's Accounting Officer, it may present a bank guarantee for the amount instead.
If the undertaking appeals against the decision, and has already provisionally paid the fine, the amount is disclosed as a contingent liability. However, since an appeal against an EU decision by the addressee does not have suspensory effect, the cash received is used to clear the receivable. If a guarantee is received instead of payment, the fine remains as a receivable. If it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover this risk. If a guarantee had been given instead, then the receivable outstanding is written-down as required. The accumulated interest received by the European Commission on the bank accounts where received payments are deposited is recognised as revenue, and any contingent liability is increased accordingly.
Exchange revenue
Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.
Interest income and expense
Interest income and expense are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. When calculating the effective interest rate, the European Union estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Dividend income
Dividend income is recognised when the right to receive payment is established.
1.6.2 Expense
Exchange expenses arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the European Union. They are valued at original invoice cost. Non-exchange expenses are specific to the EU and account for the majority of its expenses. They relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations.
Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation (Financial Regulation, Staff Regulations, or other regulation) or a contract has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.
When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expenses.
1.7 CONTINGENT ASSETS AND LIABILITIES
1.7.1 Contingent assets
A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the European Union. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.
1.7.2 Contingent liabilities
A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the European Union; or a present obligation that arises from past events but is not recognised because: it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or, in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability.
2. NOTES TO THE BALANCE SHEET
NON-CURRENT ASSETS
2.1 INTANGIBLE ASSETS
|| EUR millions
|| Amount
||
Gross carrying amount at 31.12.2011 || 88
Additions || 26
Disposals || (9)
Transfer between asset categories || 3
Other changes || 5
||
Gross carrying amount at 31.12.2012 || 113
||
Accumulated amortisation at 31.12.2011 || (43)
Amortisation charge for the year || (8)
Disposals || 2
Transfer between asset categories || (3)
Other changes || 0
||
Accumulated amortisation at 31.12.2012 || (52)
||
Net carrying amount at 31.12.2012 || 61
Net carrying amount at 31.12.2011 || 45
The above amounts relate primarily to computer software.
2.2 PROPERTY, PLANT AND EQUIPMENT (PPE)
The increase in PPE of EUR 415 million was mainly driven by an increase in assets under construction. Included under assets under construction at 31 December 2012 are EUR 660 million (2011: EUR 219 million) of assets relating to the Galileo project, the EU's Global Navigation Satellite System, being built with the assistance of the European Space Agency (ESA). An amount of EUR 12 million of non-capitalisable development cost has been recognised as expenses during the period.
PROPERTY, PLANT AND EQUIPMENT ||
|| || || || || || || || EUR millions
|| Land and || Plant and || Furniture and || Computer hardware || Other tangible || Finance leases || Assets under || TOTAL
|| buildings || equipment || vehicles || || assets || || construction ||
|| || || || || || || ||
|| || || || || || || ||
Gross carrying amount at 31.12.2011 || 1 258 || 303 || 72 || 254 || 119 || 1 511 || 261 || 3 778
Additions || 6 || 23 || 11 || 20 || 5 || 14 || 486 || 565
Disposals || (26) || (20) || (15) || (32) || (7) || 0 || 0 || (100)
Transfers between asset categories || 0 || 5 || 0 || 11 || 0 || (14) || (5) || (3)
Other changes || 25 || 2 || 1 || 0 || 1 || 0 || 1 || 30
|| || || || || || || ||
Gross carrying amount at 31.12.2012 || 1 263 || 313 || 69 || 253 || 118 || 1 511 || 743 || 4 270
|| || || || || || || ||
Accumulated depreciation at 31.12.2011 || (633) || (265) || (56) || (207) || (85) || (459) || || (1 705)
Depreciation charge for the year || (32) || (18) || (10) || (20) || (9) || (54) || || (143)
Depreciation written back || 0 || 0 || 0 || 0 || 0 || 1 || || 1
Disposals || 3 || 20 || 15 || 31 || 6 || 5 || || 80
Transfers between asset categories || 0 || 0 || 0 || (11) || 0 || 14 || || 3
Other changes || (3) || (2) || (1) || (5) || 0 || (7) || || (18)
|| || || || || || || ||
Accumulated depreciation at 31.12.2012 || (665) || (265) || (52) || (212) || (88) || (500) || || (1 782)
|| || || || || || || ||
NET CARRYING AMOUNT AT 31.12.2012 || 598 || 48 || 17 || 41 || 30 || 1 011 || 743 || 2 488
NET CARRYING AMOUNT AT 31.12.2011 || 625 || 38 || 16 || 47 || 34 || 1 052 || 261 || 2 073
Charges still to be paid in respect of finance leases and similar entitlements are shown in non-current and current liabilities in the balance sheet (see notes 2.15 and 2.18.1). They break down as follows:
Finance Leases || EUR millions
Description || Cumulative charges (A) || Future amounts to be paid || Total Value || Subsequent expenses on assets || Asset value || Depreciation || Net carrying amount (A+B+C+D)
< 1 year || > 1 year || > 5 years || Total Liability (B) || (A+B) || (C) || (A+B+C) || (D)
Land and buildings || 267 || 35 || 175 || 938 || 1 148 || 1 415 || 60 || 1 475 || (481) || 994
Other tangible assets || 18 || 7 || 11 || 0 || 18 || 36 || 0 || 36 || (19) || 17
Total at 31.12.2012 || 285 || 42 || 186 || 938 || 1 166 || 1 451 || 60 || 1 511 || (500) || 1 011
Interest element || 66 || 238 || 425 || 729 ||
Total future minimum lease payments at 31.12.2012 || 108 || 424 || 1 363 || 1 895 ||
Total future minimum lease payments at 31.12.2011 || 106 || 415 || 1 439 || 1 960 ||
2.3 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
|| || || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Participations in joint ventures || 2.3.1 || 42 || 62
Participations in associates || 2.3.2 || 350 || 312
Total investments || || 392 || 374
2.3.1 Participations in joint ventures
|| EUR millions
|| GJU || SESAR || ITER || IMI || FCH || Total
Amount at 31.12.2011 || 0 || 0 || 0 || 25 || 37 || 62
Contributions || 0 || 70 || 116 || 98 || 54 || 338
Share of net result || 0 || (70) || (106) || (91) || (91) || (358)
Amount at 31.12.2012 || 0 || 0 || 10 || 32 || 0 || 42
Participations in joint ventures are accounted for using the equity method. The following carrying amounts are attributable to the European Commission based on its percentage of participation:
|| || || EUR millions
|| || 31.12.2012 || 31.12.2011
Non-current assets || || 226 || 211
Current assets || || 106 || 123
Non-current liabilities || || 0 || 0
Current liabilities || || (291) || (314)
Revenue || || 8 || 8
Expenses || || (427) || (379)
2.3.2 Participations in associates
|| || || || EUR millions
|| EIF || ARTEMIS || Clean Sky || ENIAC || Total
Amount at 31.12.2011 || 292 || 0 || 0 || 20 || 312
Contributions || - || 22 || 97 || 16 || 135
Share of net surplus/(deficit) || 9 || (22) || (97) || (22) || (132)
Other equity movements || 35 || - || - || - || 35
Amount at 31.12.2012 || 336 || 0 || 0 || 14 || 350
Participations in associates are accounted for using the equity method. The following carrying amounts are attributable to the European Commission based on its percentage of participation:
|| || || EUR millions
|| || 31.12.2012 || 31.12.2011
Assets || || 505 || 460
Liabilities || || (191) || (162)
Revenue || || 33 || 28
Surplus/(Deficit) || || (177) || (182)
European Investment Fund (EIF)
The European Investment Fund (EIF) is the European Union's financial institution specialising in providing risk capital and guarantees to SMEs. The Commission has paid in 20% of its participation, the balance being uncalled corresponding to an amount of EUR 720 million.
EUR millions
|| Total EIF capital || Commission subscription
Total Share Capital || 3 000 || 900
Paid-in || (600) || (180)
Uncalled || 2 400 || 720
2.4 NON-CURRENT FINANCIAL ASSETS
|| || || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Available for sale financial assets || 2.4.1 || 3 715 || 2 272
Loans || 2.4.2 || 57 205 || 41 161
Total || || 60 920 || 43 433
2.4.1 Non-current available for sale financial assets
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Guarantee Fund (GF)* || 1 327 || 1 475
BUFI investments || 832 || -
Risk Sharing Finance Facility (RSFF) || 594 || -
Loan Guarantee Instrument for TEN-T projects (LGTT) || 52 || -
European Bank for Reconstruction and Development (EBRD) || 188 || 188
Risk Capital Operations || 123 || 134
ETF Start up || 305 || 234
Other available for sale investments || 294 || 241
Total || 3 715 || 2 272
*After elimination of the EFSM bonds
In order to better present the economic reality, from 2012 onwards, all available for sale financial assets are presented according to their remaining maturity at the balance sheet date. Assets with a maturity of greater than 1 year at the reporting date are shown as non-current, whereas assets maturing before end 2013 are shown as current (see note 2.8). The above 2012 amount for the Guarantee Fund is, unlike in 2011, shown excluding cash and cash equivalents (2011: EUR 302 million) and the related liability (2011: EUR 1 million). Had the current approach been followed in the 2011 accounts, the comparatives would have been as follows:
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Guarantee Fund (GF)* || 1 327 || 973
BUFI investments || 832 || 588
Risk Sharing Finance Facility (RSFF) || 594 || 365
Loan Guarantee Instrument for TEN-T projects (LGTT) || 52 || 47
European Bank for Reconstruction and Development (EBRD) || 188 || 188
Risk Capital Operations || 123 || 134
ETF Start up || 305 || 234
Other available for sale investments || 294 || 241
Total || 3 715 || 2 770
*After elimination of the EFSM bonds
2.4.2 Non-current loans
|| || || || EUR millions
|| || Note || 31.12.2012 || 31.12.2011
Loans granted from the EU budget || || 2.4.2.1 || 147 || 151
Loans granted from borrowed funds || || 2.4.2.2 || 57 058 || 41 010
Total || || 57 205 || 41 161
2.4.2.1 Loans granted from the European Union budget
|| EUR millions
Loans with special conditions || Amount
Total at 31.12.2011 || 151
New loans || 0
Repayments || (17)
Exchange differences || 2
Changes in carrying amount || 11
Total at 31.12.2012 || 147
This item covers loans with special conditions granted at preferential rates as part of co-operation with non-member countries. All amounts fall due more than 12 months after year-end. The effective interest rates on these loans vary between 7.73% and 14.507%.
2.4.2.2 Loans granted from borrowed funds
|| EUR millions
|| MFA || Euratom || BOP || EFSM || Total
Total at 31.12.2011 || 595 || 451 || 11 625 || 28 344 || 41 015
New loans || 39 || - || - || 15 800 || 15 839
Repayments || (84) || (24) || - || - || (108)
Exchange differences || - || - || - || - || -
Change in carrying amount || (1) || (2) || (2) || 332 || 327
Total at 31.12.2012 || 549 || 425 || 11 623 || 44 476 || 57 073
Amount due < 1 year || (15) || - || - || - || (15)
Amount due > 1 year || 534 || 425 || 11 623 || 44 476 || 57 058
The effective interest rates (expressed as a range of interest rates) were as follows:
Loans || 31.12.2012 || 31.12.2011
Macro Financial Assistance (MFA) || 0.298%-4.54% || 1.58513%-4.54%
Euratom || 0.431%-5.76% || 1.067%-5.76%
Balance of Payment (BOP) || 2.375%-3.625% || 2.375%-3.625%
European Financial Stability Mechanism (EFSM) || 2.375%-3.750% || 2.375%-3.50%
The European Union (EU) is empowered by the EU Treaty to adopt borrowing programmes to mobilise the financial resources necessary to fulfill its mandate. The European Commission, acting on behalf of the EU, currently operates three main programmes, the European Financial Stability Mechanism (EFSM), Balance of Payments (BOP) assistance and Macro-Financial Assistance (MFA). Additionally, the Euratom legal entity (represented by the Commission) borrows money to lend to both Member and non-Member States to finance projects relating to energy installations.
The increase in loans granted from borrowed funds is due to new EFSM loans granted to Ireland and Portugal during 2012. This increase is mirrored by an increase in the Commission's borrowings.
For more information on borrowing and lending activities, see note 2.14 and note 7 of the EU consolidated annual accounts.
European Financial Stability Mechanism (EFSM) loans – nominal value
|| EUR millions
|| Ireland || Portugal || Total
Total loans granted || 22 500 || 26 000 || 48 500
Disbursed at 31.12.2011 || 13 900 || 14 100 || 28 000
Disbursed in 2012 || 7 800 || 8 000 || 15 800
Loans disbursed at 31.12.2011 || 21 700 || 22 100 || 43 800
Loans repaid at 31.12.2012 || - || - || -
Loans outstanding at 31.12.2012 || 21 700 || 22 100 || 43 800
Undrawn amounts at 31.12.2012 || 800 || 3 900 || 4 700
Balance of Payment (BOP) loans – nominal value
|| EUR millions
|| Hungary || Latvia || Romania || Total
Total loans granted || 6 500 || 3 100 || 6 400 || 16 000
Loans disbursed at 31.12.2012 || 5 500 || 2 900 || 5 000 || 13 400
Loans repaid at 31.12.2012 || (2 000) || - || - || (2 000)
Loans outstanding at 31.12.2012 || 3 500 || 2 900 || 5 000 || 11 400
Undrawn amounts at 31.12.2012 || - || - || 1 400 || 1 400
2.5 NON-CURRENT RECEIVABLES AND RECOVERABLES
|| EUR millions
|| 31.12.2012 || 31.12.2011
Member States || 545 || 268
Due from ECSC in liquidation || 48 || 52
Guarantees and deposits || 2 || 1
Total || 595 || 321
Of the total non-current receivables, EUR 593 million (2011: EUR 320 million) relate to non-exchange transactions. The amounts due from Member States relate to non-executed conformity clearance decisions for EAGF and EAFRD.
2.6 NON-CURRENT PRE-FINANCING
|| || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Pre-financing || 2.6.1 || 40 772 || 40 625
Prepaid expenses || 2.6.2 || 3 715 || 4 098
Total || 44 487 || 44 723
Guarantees received in respect of pre-financing
These are guarantees that the Commission requests from beneficiaries that are not Member States, in certain cases when paying out advance payments (pre-financing). There are two values to disclose for this type of guarantee, the “nominal” and the “on-going” values. For the “nominal” value, the generating event is linked to the existence of the guarantee. For the “on-going” value, the guarantee’s generating event is the pre-financing payment and/or subsequent clearings. At 31 December 2012 the "nominal" value of guarantees received in respect of pre-financing amounted to EUR 1 220 million while the "on-going" value of those guarantees was EUR 955 million (2011: EUR 1 330 million and EUR 1 083 million respectively).
2.6.1 Non-current pre-financing
|| || EUR millions
Management type || 31.12.2012 || 31.12.2011
Direct centralised management || 1 247 || 1 220
Indirect centralised management || 1 042 || 774
Decentralised management || 677 || 697
Shared management || 37 214 || 37 249
Joint management || 592 || 685
Total || 40 772 || 40 625
2.6.2 Non-current prepaid expenses
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Financial Engineering Instruments || 2 717 || 3 378
Aid schemes || 998 || 720
Total || 3 715 || 4 098
Under the framework of the structural funds programmes 2007-2013, payments can be made from the EU Budget to Member States so as to contribute to Financial Engineering Instruments (be it in the form of loans, guarantees or equity investments) set up and managed under the responsibility of the Member State. Monies that are unused by these instruments at year-end are the property of the EU (as with standard pre-financing) and are thus treated as an asset on the Commission balance sheet.
Amounts included under the Aid Schemes heading are the Commission's estimate of open advances based on information collected from Member States.
CURRENT ASSETS
2.7 INVENTORIES
|| EUR millions
|| 31.12.2012 || 31.12.2011
Scientific materials || 71 || 67
Other || 14 || 16
Total || 85 || 83
2.8 CURRENT FINANCIAL ASSETS
|| || || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Available for sale financial assets || 2.8.1 || 1 300 || 2 005
Loans || 2.8.2 || 38 || 8
Total || || 1 338 || 2 013
2.8.1 Current available for sale financial assets
The following table provides an overview of available for sale financial assets with a remaining maturity before end 2013:
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Guarantee Fund (GF) || 268 || -
BUFI investments || 845 || 1 358
Risk Sharing Finance Facility (RSFF) || 160 || 547
Loan Guarantee Instrument for TEN-T projects (LGTT) || 23 || 97
Other || 4 || 3
Total || 1 300 || 2 005
As explained under note 2.4.1, the presentation of available for sale financial assets has been changed from 2012 onwards. Had the same approach been followed in the 2011 accounts, the comparatives would have been as follows:
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Guarantee Fund (GF) || 268 || 201
BUFI investments || 845 || 770
Risk Sharing Finance Facility (RSFF) || 160 || 182
Loan Guarantee Instrument for TEN-T projects (LGTT) || 23 || 49
Other || 4 || 3
Total || 1 300 || 1 205
2.8.2 Current loans
These amounts represent mainly loans with remaining final maturities less than 12 months after the balance sheet date (see note 2.4.2.2 for more details).
2.9 CURRENT RECEIVABLES AND RECOVERABLES
|| EUR millions
|| Note || 31.12.2012 || 31.12.2011
Fines || 2.9.1 || 4 090 || 3 125
Member States || 2.9.2 || 6 222 || 2 593
Accrued income and deferred charges || 2.9.3 || 3 214 || 3 139
Other receivables and recoverables || || 396 || 492
Total || || 13 922 || 9 349
The total above contains an estimated EUR 13 842 million (2011: EUR 9 019 million) relating to non-exchange transactions.
2.9.1 Fines
This concerns amounts to be recovered relating to fines issued by the Commission of EUR 4 357 million (2011: EUR 3 369 million) less a write-down of EUR 267 million (2011: EUR 244 million). Guarantees totalling EUR 2 513 million had been received for the fines outstanding at 31 December 2012 (2011: EUR 3 012 million). It should be noted that EUR 1 471 million of these receivables were due for payment after 31 December 2012.
2.9.2 Member States
|| EUR millions
|| 31.12.2012 || 31.12.2011
EAGF and Rural Development receivables: || ||
EAGF || 1 172 || 1 439
EAFRD || 14 || 23
TRDI || 44 || 37
SAPARD || 136 || 142
Write-down || (814) || (771)
Total || 552 || 870
VAT paid and recoverable || 15 || 19
Own resources: || ||
Established in the A account || 45 || 29
Established in the separate account || 1 294 || 1 263
Own resources to be received || 3 617 || 0
Write-down || (773) || (779)
Other || 16 || 114
Total || 4 199 || 627
Other receivables from Member States: || ||
Pre-financing recovery expected || 1 220 || 963
Other || 236 || 114
Total || 1 456 || 1 077
Total || 6 222 || 2 593
The significant increase in receivables from Member States is mainly explained by EUR 3 617 million of own resources to be received at year-end relating to the Amending Budgets 5 and 6/2012. These Amending Budgets were adopted on 21 November 2012 and 12 December 2012 respectively. According to Article 10 of Regulation 1150/2000 the entries corresponding to the readjustments of GNI contributions were carried out on the first working day of January 2013.
2.9.3 Accrued income and deferred charges
|| EUR millions
|| 31.12.2012 || 31.12.2011
Accrued income || 2 988 || 2 939
Deferred charges || 215 || 182
Other || 11 || 18
Total || 3 214 || 3 139
The main amount under this heading is accrued income.
|| EUR millions
|| 31.12.2012 || 31.12.2011
Own resources || 2 388 || 2 644
Agricultural assigned revenue Nov and Dec || 218 || 111
Structural Funds: financial corrections || 276 || 16
Other accrued income || 106 || 168
Total accrued income || 2 988 || 2 939
2.10 CURRENT PRE-FINANCING
|| || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Pre-financing || 2.10.1 || 9 458 || 8 055
Prepaid expenses || 2.10.2 || 3 690 || 2 918
Total || 13 148 || 10 973
2.10.1 Current pre-financing
|| || EUR millions
Management type || 31.12.2012 || 31.12.2011
Direct centralised management || 3 369 || 3 092
Indirect centralised management || 3 936 || 3 069
Decentralised management4 || 301 || 330
Shared management || 1 008 || 761
Joint management || 844 || 803
Total || 9 458 || 8 055
The current pre-financing balance has two distinct components: the gross pre-financing and the accruals made on this pre-financing (made to reflect the related expenditure estimated to have been incurred at year-end). Both elements have to be taken into consideration for a proper analysis of the variation of the current net pre-financing balance from one year to another.
On the one hand, the year 2012 marked a further decrease of EUR 3 billion in gross current pre-financing under shared management due to the significant advancement in the closure process of the previous programming period 2000-2006. On the other hand, the accruals on this pre-financing have decreased by EUR 3.3 billion, which led to an overall increase of EUR 0.3 billion in the net current pre-financing.
The reason for these movements lies in the overlapping of the previous programming period 2000-2006 (which is now in its closure phase) with the current programming period 2007-2013. Whereas pre-financing related to the previous programming period is estimated to have been entirely used (i.e. net balance zero), the pre-financing of the current programming period is estimated to be only partially used as at 31.12.2012. The remaining part is estimated to be used in 2013 or later.
A similar situation is noted for direct centralised management, where the gross pre-financing has decreased by EUR 741 million, while the net pre-financing has slightly increased by EUR 277 million.
2.10.2 Current prepaid expenses
|| || EUR millions
|| 31.12.2012 || 31.12.2011
Financial Engineering Instruments || 1 358 || 1 126
Aid Schemes || 2 332 || 1 792
Total || 3 690 || 2 918
2.11 CASH AND CASH EQUIVALENTS
|| || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Unrestricted cash: || 2.11.1 || ||
Accounts with Treasuries and Central Banks || || 2 203 || 7 369
Current accounts || || 106 || 220
Imprest accounts || || 3 || 3
Transfers (cash in transit) || || (1) || (10)
Total || || 2 311 || 7 582
Cash belonging to financial instruments || 2.11.2 || 1 845 || 1 459
Restricted cash || 2.11.3 || 5 122 || 8 320
Total || || 9 278 || 17 361
2.11.1 Unrestricted cash
Unrestricted cash covers all the funds which the Commission keeps in its accounts in each Member State and EFTA country (treasury or central bank), as well as in current accounts, imprest accounts and petty cash.
The significant decrease in unrestricted cash was mainly caused by a decrease in the accounts with treasuries and central banks. The ending balance of 2012 was significantly lower than the ending balance of 2011 due to the high budget execution rate for 2012. Moreover, additional cash resources related to the Amending Budget 5/2012 and the Amending Budget 6/2012 were only received in 2013.
2.11.2 Cash belonging to financial instruments
Amounts shown under this heading are mainly current deposits and other cash equivalents managed by fiduciaries on behalf of the Commission for the purpose of implementing particular financial instruments programmes funded by the EU budget. This cash can thus only be used in the financial instruments programme concerned. At year-end, EUR 100 million had been committed to, but not yet been drawn down by the other parties.
As explained under note 2.4.1, the presentation of available for sale financial assets and the related cash and cash equivalents has been changed from 2012 onwards. In 2012, this heading includes the cash and cash equivalents of the Guarantee Fund whereas the 2011 total does not include the EUR 302 million cash and cash equivalents of the Guarantee Fund for 2011, which had been shown under non-current AFS assets. Had the new presentation, including showing cash belonging to all financial instruments on a separate line, been followed in the 2011 accounts, the comparatives would have been EUR 85 million for current accounts and EUR 1 896 million for cash belonging to financial instruments.
2.11.3 Restricted cash
Restricted cash refers to amounts received in connection with fines issued by the Commission for which the case is still open. These are kept in specific deposit accounts that are not used for any other activities. In case an appeal has been lodged or where it is unknown if an appeal will be made by the other party the underlying amount is shown as contingent liability in note 5.2.
The decrease in restricted cash is due to two main reasons: on the one hand there were a number of final decisions by the Court of Justice which concerned significant amounts, and on the other hand, there was an increased use made of the specifically created fund for fines (BUFI). Since January 2010, all provisionally cashed fines are managed by the Commission in this fund and invested in financial instruments categorised as available for sale (see notes 2.4.1 and 2.8.1).
NON-CURRENT LIABILITIES
2.12 PENSION AND OTHER EMPLOYEE BENEFITS
|| EUR millions
|| 31.12.2012 || 31.12.2011
Pensions – Staff || 37 528 || 30 617
Pensions – Members of the Commission || 85 || 80
Joint Sickness Insurance Scheme || 4 007 || 3 441
Total || 41 620 || 34 138
The significant increase in the pension liability is explained by the sizeable decrease in the discount rate applied, resulting in a large actuarial loss for the year.
2.12.1 Pensions – Staff
In accordance with Article 83 of the Staff Regulations, the payment of the benefits provided for in the staff pension scheme (PSEO: Pension Scheme of European Officials) constitutes a charge to the EU's budget. The scheme is not funded, but the Member States guarantee the payment of these benefits collectively according to the scale fixed for the financing of this expense. In addition, officials contribute one third to the long-term financing of this scheme via a compulsory contribution.
The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff at 31 December 2012 and on the rules of the Staff Regulations applicable at this date. This valuation was carried out in accordance with the methodology of IPSAS 25 (and therefore also EU accounting rule 12). The method used to calculate this liability is the projected unit credit method. The main actuarial assumptions available at the valuation date and used on the valuation were as follows:
||
Actuarial Assumptions – staff pension liability || 31.12.2012 || 31.12.2011
Nominal discount rate || 3.6% || 4.9%
Expected inflation rate || 2.0% || 1.8%
Real discount rate || 1.6% || 3.0%
Probability of marriage: Man/Woman || 84%/38% || 84%/38%
General Salary Growth/pension revaluation || 0% || 0%
2008 International Civil Servants Life Table || Yes || Yes
|| EUR millions
Movement in Gross Employee Benefits liability || Staff pension liability || Sickness Insurance
Gross Liability at 31.12.2011 || 34 233 || 3 711
Service/normal cost || 1 144 || -
Interest cost || 1 043 || -
Benefits paid || (1 243) || -
Actuarial losses || 6 691 || 567
Change due to newcomers || 93 || -
Gross Liability at 31.12.2012 || 41 961 || 4 278
Correction coefficients applied to pensions || 1 022 || N/A
Deduction of taxes on pensions || (5 455) || N/A
Plan assets || N/A || (271)
Net liability at 31.12.2012 || 37 528 || 4 007
2.12.2 Joint Sickness Insurance Scheme
A valuation is also made for the estimated liability that the EU has regarding its contributions to the Joint Sickness Insurance Scheme in relation to its retired staff. The gross liability has been valued at EUR 4 278 million (2011: 3 711 million) and plan assets of EUR 271 million (2011: 270 million) are deducted from the gross liability to arrive at the net amount. The discount rate and the general salary growth used in the calculation are the same as those used in the staff pension valuation, hence the significant increase in the liability.
2.13 NON-CURRENT PROVISIONS
|| || || EUR millions
|| Amount at 31.12.2011 || Additional provisions || Unused amounts reversed || Amounts used || Transfer to current || Change in estimation || Amount at 31.12.2012
Legal cases || 366 || 58 || (241) || (53) || 0 || 0 || 130
Nuclear site dismantling || 1 005 || 0 || 0 || (3) || (29) || 24 || 997
Financial || 100 || 38 || 0 || 0 || (33) || 3 || 108
Other || 4 || 0 || (1) || (1) || (1) || 1 || 2
Total || 1 475 || 96 || (242) || (57) || (63) || 28 || 1 237
The decrease in the non-current provisions balance is mainly due to a decrease in the provisions for legal cases following the closure of an EAGF court case in 2012.
Nuclear site dismantlement
This provision covers the estimated costs of the decommissioning of the JRC nuclear facilities and waste management programme. It is based on a study made by a consortium of independent experts.
2.14 NON-CURRENT FINANCIAL LIABILITIES
|| || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Borrowings || 2.14.1 || 57 058 || 41 010
Elimination Guarantee Fund* || || (20) || (21)
Total || || 57 038 || 40 989
* The Guarantee Fund holds EFSM bonds issued by the Commission, so these need to be eliminated.
2.14.1 Non-current borrowings
|| EUR millions
|| MFA || Euratom || BOP || EFSM || Total
Total at 31.12.2011 || 595 || 451 || 11 625 || 28 344 || 41 015
New borrowings || 39 || - || - || 15 800 || 15 839
Repayments || (84) || (24) || - || - || (108)
Exchange differences || - || - || - || - || -
Changes in carrying amount || (1) || (2) || (2) || 332 || 327
Total at 31.12.2012 || 549 || 425 || 11 623 || 44 476 || 57 073
Amount due < 1 year || (15) || 0 || 0 || 0 || (15)
Amount due > 1 year || 534 || 425 || 11 623 || 44 476 || 57 058
This heading includes borrowings due by the European Commission maturing in over one year. The changes in carrying amount correspond to the change in accrued interests. The effective interest rates (expressed as a range of interest rates) were as follows:
Borrowings || 31.12.2012 || 31.12.2011
Macro Financial Assistance (MFA) || 0.298%-4.54% || 1.58513%-4.54%
Euratom || 0.351%-5.6775% || 0.867%-5.6775%
BOP || 2.375%-3.625% || 2.375%-3.625%
EFSM || 2.375%-3.750% || 2.375%-3.50%
For more information on borrowing and lending activities, see Note 7 of the EU consolidated annual accounts.
2.15 OTHER NON-CURRENT LIABILITIES
|| EUR millions
|| 31.12.2012 || 31.12.2011
Finance Leasing debts || 1 124 || 1 155
Buildings paid for in instalments || 352 || 367
Other || 26 || 28
Total || 1 502 || 1 550
CURRENT LIABILITIES
2.16 CURRENT PROVISIONS
|| || || EUR millions
|| Amount at 31.12.2011 || Additional provisions || Unused amounts reversed || Amounts used || Transfers from non-current || Change in estimation || Amount at 31.12.2012
Legal cases || 10 || 217 || (1) || (4) || 0 || 0 || 222
Nuclear site dismantlement || 29 || 0 || 0 || (29) || 29 || 0 || 29
Financial || 165 || 30 || 0 || (44) || 33 || 4 || 188
Other || 38 || 271 || (31) || (4) || 1 || 0 || 275
Total || 242 || 518 || (32) || (81) || 63 || 4 || 714
2.17 CURRENT FINANCIAL LIABILITIES
This heading relates to the portion of non-current borrowings (see note 2.14) that mature during the 12 months following the balance sheet date.
2.18 PAYABLES
|| || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Current portion of non-current liabilities || 2.18.1 || 57 || 53
Payables || 2.18.2 || 21 351 || 22 110
Accrued charges and deferred income || 2.18.3 || 68 076 || 68 757
Total || || 89 484 || 90 920
2.18.1 Current portion of non-current liabilities
|| EUR millions
|| 31.12.2012 || 31.12.2011
Finance leasing liabilities || 42 || 39
Other || 15 || 14
Total || 57 || 53
2.18.2 Current payables
|| || EUR millions ||
Type || 31.12.2012 || 31.12.2011
Member States || 23 020 || 22 189
Suppliers and other || 1 506 || 1 421
Estimated non-eligible amounts and pending pre-payments || (3 175) || (1 500)
Total || 21 351 || 22 110
Member States
The primary amounts here relate to unpaid cost claims for Structural Fund actions; EUR 5.6 billion for ESF and EUR 15.6 billion for ERDF and Cohesion Fund (EUR 5.8 billion and EUR 14 billion respectively in 2011).
2.18.3 Accrued charges and deferred income
|| EUR millions
|| 31.12.2012 || 31.12.2011
Accrued charges || 67 914 || 68 302
Deferred income || 157 || 449
Amounts related to consolidated entities || 5 || 6
Total || 68 076 || 68 757
The split of accrued charges is as follows:
|| EUR millions
|| 31.12.2012 || 31.12.2011
Agriculture and Rural Development: || ||
EAGF: Direct aid period 16/10 to 31/12 || 33 040 || 33 774
EAGF: Direct Aid – other entitlements || 11 492 || 10 701
EAGF: Sugar restructuring || 0 || 224
EAGF: Other || 1 || 23
EAFRD || 12 497 || 12 127
Total || 57 030 || 56 849
Structural Actions: || ||
EFF/FIFG || 66 || 56
ERDF and Cohesion fund || 4 359 || 4 791
ISPA || 382 || 172
ESF || 1 378 || 1 687
Total || 6 185 || 6 706
Other accrued charges: || ||
R&D || 1 077 || 1 157
Other || 3 622 || 3 590
Total || 4 699 || 4 747
Total accrued charges || 67 914 || 68 302
NET ASSETS
2.19 RESERVES
|| EUR millions
|| 31.12.2012 || 31.12.2011
Fair value reserve || 96 || (82)
Guarantee Fund reserve || 2 079 || 1 911
Other reserves || 79 || 59
Total || 2 254 || 1 888
The reserve of the Guarantee Fund reflects the 9% target amount of the outstanding amounts guaranteed by the Fund that is required to be kept as assets.
2.20 AMOUNTS TO BE CALLED FROM MEMBER STATES
|| EUR millions
|| Amount
Amounts to be called from Member States at 31.12.2011 || 40 459
Return of 2011 budget surplus to Member States || 1 497
Movement in Guarantee Fund reserve || 168
Other reserve movements || 18
Economic result of the year || 5 008
Total amounts to be called from Members States at 31.12.2012 || 47 150
This amount represents that part of the expenses already incurred by the Commission up to 31 December 2012 that must be funded by future budgets. Many expenses are recognised under accrual accounting rules in the year N although they may be actually paid in year N+1 (or later) and funded using the budget of year N+1 (or later). The inclusion in the accounts of these liabilities coupled with the fact that the corresponding amounts are financed from future budgets, results in liabilities greatly exceeding assets at the year-end. The most significant amounts to be highlighted are the EAGF activities. The majority of the amounts to be called are in fact paid by the Member States in less than 12 months after the end of the financial year in question as part of the budget of the following year.
It is essentially only the employee benefits obligations of the Commission towards its staff which are paid out over a longer period, noting that the funding of the pension payments by the annual budgets is guaranteed by the Member States.
It should also be noted that the above has no effect on the budget result – budget revenue should always equal or exceed budget expenditure and any excess of revenue is returned to Member States.
3. NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE
3.1 OWN RESOURCE AND CONTRIBUTIONS REVENUE
|| || EUR millions
|| 2012 || 2011
Own resource revenue: GNI resources || 98 061 || 88 442
Traditional own resources: || ||
Customs duties || 16 087 || 16 528
Sugar levies || 157 || 161
VAT resources || 14 871 || 14 763
Total || 129 176 || 119 894
Budgetary adjustments || (1 402) || 1 627
Contributions of third countries (incl. EFTA countries) || 302 || 248
Total || 128 076 || 121 769
Own resources revenue is the primary element of the European Commission’s operating revenue. Thus the bulk of expenses is financed by own resources as other revenue represents only a minor part of the total financing. The increase in own resources and contributions revenue in 2012 compared to 2011 is in line with the increase in the budget between the years.
3.2 OTHER OPERATING REVENUE
|| || EUR millions
|| 2012 || 2011
Fines || 1 884 || 868
Agricultural levies || 87 || 65
Recovery of expenses: || ||
Direct centralised management || 62 || 76
Indirect centralised management || 30 || 17
Decentralised management || 27 || 106
Joint management || 8 || 3
Shared management || 1 376 || 845
Total || 1 503 || 1 047
Revenue from administrative operations: || ||
Staff || 890 || 878
Property, plant and equipment related revenue || 18 || 25
Other administrative revenue || 164 || 158
Total || 1 072 || 1 061
Miscellaneous operating revenue: || ||
Adjustments/provisions || 274 || 51
Exchange gains || 328 || 469
Other || 935 || 1 060
Total || 1 537 || 1 580
Total || 6 083 || 4 621
The increase in other operating revenue compared to 2011 of EUR 1 462 million is mainly driven by an increase in revenue relating to fines (EUR 1 016 million). A high value fine case in 2012 relating to TV and computer monitor tubes contributed to this increase.
3.3 ADMINISTRATIVE EXPENSES
|| || EUR millions
|| 2012 || 2011
Staff expenses || 3 197 || 3 080
Depreciation and impairment || 155 || 166
Other administrative expenses || 1 869 || 1 816
Total || 5 221 || 5 062
Included under this heading are expenses of EUR 151 million (2011: EUR 153 million) relating to operating leases – amounts committed to be paid during the remaining term of these lease contracts are as follows:
|| || || || || EUR millions
Description || Future amounts to be paid
< 1 year || 1- 5 years || > 5 years || Total
Buildings || 129 || 446 || 459 || 1 034
IT materials and other equipment || 3 || 4 || 0 || 7
Total || 132 || 450 || 459 || 1 041
3.4 OPERATING EXPENSES
|| || EUR millions
|| 2012 || 2011
Primary operating expenses: || ||
Direct centralised management || 10 728 || 11 197
Indirect centralised management || 4 218 || 4 137
Decentralised management || 1 019 || 766
Shared management || 106 378 || 104 068
Joint management || 1 819 || 1 714
Total || 124 162 || 121 882
Other operating expenses: || ||
Adjustments/provisions || 425 || 243
Exchange losses || 265 || 368
Other || 156 || 1 748
Total || 846 || 2 359
Total || 125 008 || 124 241
The main elements of operating expenses above cover the following areas: agriculture and rural development (EUR 57 billion), regional development and cohesion (EUR 39 billion), employment and social affairs (EUR 11 billion), research and communication networks, content and technology (EUR 6 billion) and external relations (EUR 3 billion). In 2011, the item other (under other operating expenses) mainly comprised a correction of fines issued in previous years totalling EUR 1 471 million.
Included under administrative and operating expenses are expenses relating to research and development as follows:
|| || EUR millions
Research and Development costs recognised as expense || 2012 || 2011
Research costs || 322 || 319
Non-capitalised development costs || 58 || 116
Total || 380 || 435
3.5 FINANCIAL REVENUE
|| || EUR millions
|| 2012 || 2011
Dividend income || 12 || 5
Interest income: || ||
On pre-financing || 28 || 40
On late payments || 242 || 89
On available for sale assets || 58 || 68
On loans || 1 543 || 905
On cash and cash equivalents || 20 || 118
Total || 1 891 || 1 220
Other financial income: || ||
Realised gain on sale of financial assets || 12 || 3
Other || 160 || 169
Total || 172 || 172
Exchange gains || 9 || 3
Total || 2 084 || 1 400
The increase in financial revenue is mainly explained by an increase in interest income on loans. This increase is in line with the increased balance of the EFSM loans (see notes 2.4.2.2 and 2.14.1). As these loans are back-to-back loans, a similar increase was also noted in interest expenses on loans (see note 3.6).
The decrease in income on cash and cash equivalents can be explained by significant diminution of market interest rates recorded in 2012. The category which was impacted most is interest from fines provisionally cashed. In this specific category, the combined effect of interest rate decrease and an important number of fines accounts closed in 2012 led to the diminution of interest income by approximately EUR 81 million.
3.6 FINANCIAL EXPENSES
|| || EUR millions
|| 2012 || 2011
Interest expenses: || ||
Leasing || 65 || 67
On borrowings || 1 528 || 888
Other || 21 || 30
Total || 1 614 || 985
Other financial expenses: || ||
Adjustments to financial provisions || 75 || 74
Expenses relating to financial instruments managed by fiduciaries || 43 || 47
Impairment losses on AFS financial assets || 7 || 12
Realised loss on sale of financial assets || 4 || 3
Other || 140 || 142
Total || 269 || 278
Exchange losses || 14 || 49
Total || 1 897 || 1 312
3.7 SHARE OF NET DEFICIT OF JOINT VENTURES AND ASSOCIATES
In accordance with the equity method of accounting, the Commission includes in its statement of financial performance its share of the net deficit of its joint ventures and associates (see also notes 2.3.1 and 2.3.2).
3.8 REVENUE FROM NON-EXCHANGE TRANSACTIONS
In 2012, EUR 133 882 million revenue from non-exchange transactions has been recognised in the economic outturn account (2011: 127 243 million).
3.9 SEGMENT REPORTING
|| || || EUR millions
|| Activities within the EU || Activities outside the EU || Services and Other || Total
Fines || 1 884 || - || - || 1 884
Agricultural levies || 87 || - || - || 87
Recovery of expenses || 1 444 || 59 || - || 1 503
Revenue from administrative operations || 78 || 1 || 993 || 1 072
Miscellaneous operating revenue || 1 052 || 90 || 395 || 1 537
OTHER OPERATING REVENUE || 4 545 || 150 || 1 388 || 6 083
Administrative expenses: || (2 276) || (628) || (2 317) || (5 221)
Staff expenses || (1 550) || (317) || (1 330) || (3 197)
Intangible assets and PPE related expenses || (43) || 1 || (113) || (155)
Other administrative expenses || (683) || (312) || (874) || (1 869)
Operating expenses: || (118 210) || (5 989) || (809) || (125 008)
Direct centralised management || (6 997) || (3 572) || (159) || (10 728)
Indirect centralised management || (3 762) || (422) || (34) || (4 218)
Decentralised management || (494) || (525) || 0 || (1 019)
Shared management || (106 463) || 82 || 3 || (106 378)
Joint management || (269) || (1 550) || 0 || (1 819)
Other operating expenses || (225) || (2) || (619) || (846)
TOTAL OPERATING EXPENSES || (120 486) || (6 617) || (3 126) || (130 229)
Net operating expenses || (115 941) || (6 467) || (1 738) || (124 146)
Own resource and contributions revenue || || || || 128 076
Surplus from operating activities || || || || 3 930
Net financial revenue || || || || 187
Movement in pension and other employee benefits liability || || (8 636)
Share of associates/joint ventures deficit || || || || (489)
Economic result of the year || || || || (5 008)
4. NOTES TO THE CASHFLOW STATEMENT
4.1 PURPOSE AND PREPARATION OF THE CASHFLOW STATEMENT
Cash flow information is used to provide a basis for assessing the ability of the Commission to generate cash and cash equivalents, and its needs to utilise those cash flows.
The cashflow statement is prepared using the indirect method. This means that the net surplus or deficit for the financial year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of revenue or expense associated with investing cash flows.
Cash flows arising from transactions in a foreign currency are recorded in the European Commission’s reporting currency (Euro), by applying to the foreign currency amount the exchange rate between the euro and the foreign currency at the date of the cash flow.
The cashflow statement presented reports cash flows during the period classified by operating and investing activities (the Commission does not have financing activities).
4.2 OPERATING ACTIVITIES
Operating activities are the activities of the Commission that are not investing activities. These are the majority of the activities performed. Loans granted to beneficiaries (and the related borrowings, when applicable) are not considered as investing (or financing) activities as they are part of the general objectives and thus daily operations of the Commission. Operating activities also include investments such as EIF, EBRD and venture capital funds. Indeed, the objective of these activities is to participate in the achievement of policy targeted outcomes.
4.3 INVESTING ACTIVITIES
Investing activities are the acquisition and disposal of intangible assets and property, plant and equipment and of other investments which are not included in cash equivalents. Investing activities do not include loans granted to beneficiaries. The objective is to show the real investments made by the Commission.
5. CONTINGENT ASSETS AND LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES
5.1 CONTINGENT ASSETS
|| || || EUR millions
|| || 31.12.2012 || 31.12.2011
Guarantees received: || || ||
Performance guarantees || || 232 || 236
Other guarantees || || 2 || 2
Other contingent assets || || 12 || 15
Total || || 246 || 253
Performance guarantees are requested to ensure that beneficiaries of Commission funding meet the obligations of their contracts with the Commission.
5.2 CONTINGENT LIABILITIES
|| || || EUR millions
|| Note || 31.12.2012 || 31.12.2011
Guarantees given || 5.2.1 || 22 317 || 24 394
Fines || 5.2.2 || 6 378 || 8 951
EAGF, rural development and pre-accession || 5.2.3 || 1 188 || 2 345
Cohesion policy || 5.2.4 || 546 || 318
Legal cases and other disputes || 5.2.5 || 78 || 187
Other contingent liabilities || || 1 || 2
Total || || 30 508 || 36 197
All contingent liabilities, except those relating to fines, would be financed, should they fall due, by the EU budget in the years to come.
5.2.1 Guarantees given
|| EUR millions
|| 31.12.2012 || 31.12.2011
On loans granted by the EIB from its own resources: 65% guarantee || 18 683 || 20 362
70% guarantee || 1 654 || 1 992
75% guarantee || 383 || 534
100% guarantee || 594 || 724
Total || 21 314 || 23 612
Other guarantees given || 1 003 || 782
Total || 22 317 || 24 394
The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries (including loans granted to Member States before accession). However, the EU's guarantee is limited to a percentage of the ceiling of the credit lines authorised: 65% (for the mandate 2000-2007), 70%, 75% or 100%. For the mandate 2007-2013, the EU's guarantee is limited to 65% of the outstanding balances, not on the credit lines authorised. Where the ceiling is not reached, the EU guarantee covers the full amount. The above 2011 amount for the 65% guarantee does not take the difference in calculation with regard to the 2000-2007 and 2007-2013 mandates into account. Had the 2011 amount been calculated based on this differentiation, the amount to be disclosed would have been EUR 17 423 million.
Other guarantees given relate mainly to the Risk Sharing Finance Facility (EUR 948 million) and the Loan Guarantee Instrument for Ten-T projects (EUR 39 million). For more information on these see note 2.4.1.
5.2.2 Fines
These amounts concern fines imposed by the Commission for infringement of competition rules that have been provisionally paid and where either an appeal has been lodged or where it is unknown if an appeal will be made. The contingent liability will be maintained until a decision by the Court of Justice on the case is final. Interest earned on provisional payments is included in the economic result of the year and also as a contingent liability to reflect the uncertainty of the Commission’s title to these amounts.
5.2.3 EAGF, rural development and pre-accession
These are contingent liabilities towards the Member States connected with the EAGF conformity decisions, rural development and pre-accession financial corrections pending judgement of the Court of Justice. The determination of the final amount of the liability and the year in which the effect of successful appeals will be charged to the budget will depend on the length of the procedure before the Court.
5.2.4 Cohesion policy
These are contingent liabilities towards the Member States in conjunction with actions under cohesion policy awaiting the oral hearing date or pending judgement of the Court of Justice.
5.2.5 Legal cases and other disputes
This heading relates to actions for damages currently being brought against the Commission, other legal disputes and the estimated legal costs. It should be noted that in an action for damages under Article 288 EC the applicant must demonstrate a sufficiently serious breach by the institution of a rule of law intended to confer rights on individuals, real harm suffered by the applicant, and a direct causal link between the unlawful act and the harm.
5.3 OTHER SIGNIFICANT DISCLOSURES
5.3.1 Outstanding commitments not yet expensed
|| EUR millions
|| 31.12.2012 || 31.12.2011
Outstanding commitments not yet expensed || 174 070 || 164 197
The amount disclosed above is the budgetary RAL ("Reste à Liquider") less related amounts that have been included as expenses in the 2012 statement of financial performance. The budgetary RAL is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes. At 31 December 2012 the budgetary RAL totalled EUR 217 222 million (2011: EUR 207 046 million).
5.3.2 Significant legal commitments
|| EUR millions
|| 31.12.2012 || 31.12.2011
Structural actions || 71 775 || 142 916
Protocol with Mediterranean countries || 264 || 264
Fisheries agreements || 173 || 37
Galileo programme || 143 || 320
GMES programme || 233 || 400
TEN-T || 1 331 || 3 416
Other contractual commitments || 538 || 461
Total || 74 457 || 147 814
These commitments originated because the Commission entered into long-term legal commitments in respect of amounts that were not yet covered by commitment appropriations in the budget. This can relate to multi-annual programmes such as Structural Actions or amounts that the European Commission is committed to pay in the future under administrative contracts existing at the balance sheet date (e.g. relating to the provision of services such as security, cleaning, etc, but also contractual commitments concerning specific projects such as building works).
Structural actions
The table below shows a comparison between the legal commitments for which budget commitments have not yet been made and the maximum commitments in relation to the amounts foreseen in the financial framework 2007-2013.
|| || || || || EUR millions
|| Financial perspective amounts 2007-2013 (A) || Legal commitments concluded (B) || Budget commitments 2007-2011 (C) || Legal commitments less budget commitments (=B-C) || Maximum commitment (=A-C)
Structural funds || 347 552 || 347 521 || 293 050 || 54 471 || 54 502
Natural Resources || 100 549 || 100 539 || 85 058 || 15 481 || 15 491
Instrument for Pre-Accession Assistance || 11 255 || 9 895 || 9 473 || 422 || 1 782
Total || 459 356 || 457 955 || 387 581 || 70 374 || 71 775
TEN-T commitments
This amount relates to grants in the field of the trans-European transport network (TEN-T) for the period 2007 - 2013. The programme applies to projects identified for the development of a trans-European transport network to support both infrastructure projects and research and innovation projects to foster the integration of new technologies and innovative processes on the deployment of new transport infrastructure. The decrease in legal commitments relating to TEN-T is the combined effect of reduced legal commitments following amendment decisions and increased budget commitments.
5.3.3 Related party disclosures
The related parties of the Commission are the other EU consolidated entities and the key management personnel of these entities. Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.
Details on key management entitlements are provided in the EU consolidated annual accounts.
5.3.4 Events after the balance sheet date
At the date of transmission of these annual accounts no material issues had come to the attention of the Accounting Officer of the Commission or were reported to him that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented.
EUROPEAN COMMISSION
REPORTs on THE IMPLEMENTATION OF THE budgEt
AND EXPLANATORY NOTES
FINANCIAL YEAR 2012
* It should be noted that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to add-up
CONTENTS
Page
Part II: Reports on the implementation of the budget and explanatory notes
1. Budget implementation
1.1 Statement of comparison of budget and actual amounts 49
1.2 Reconciliation of economic result with budget result 53
2. Revenue: Summary of the implementation of budget revenue 55
3. Expenditure:
3.1 Breakdown and changes in commitment and payment appropriations by financial framework heading 56
3.2 Implementation of commitment appropriations by financial framework heading 56
3.3 Implementation of payment appropriations by financial framework heading 56
3.4 Movement in commitments outstanding by financial framework heading 57
3.5 Breakdown of commitments outstanding by year by financial framework heading 58
3.6 Breakdown and changes in commitment and payment appropriations by
policy area 59
3.7 Implementation of commitment appropriations by policy area 60
3.8 Implementation of payment appropriations by policy area 61
3.9 Movement in commitments outstanding by policy area 62
3.10 Breakdown of commitments outstanding by year of origin by policy area 63
1. BUDGET IMPLEMENTATION
1.1 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS
1.1.1 REVENUE
|| || || EUR millions ||
Title || Initial Budget || Final Budget* || Actual Revenue ||
1. Own resources || 127 512 || 128 655 || 128 886 ||
Of which Customs duties || 19 171 || 16 701 || 16 261 ||
Of which VAT || 14 499 || 14 546 || 14 648 ||
Of which GNI || 93 719 || 97 284 || 97 856 ||
3. Surpluses, balances and adjustments || 0 || 1 994 || 2 041 ||
4. Revenue accruing from persons working with the institutions and other EU bodies || 987 || 987 || 898 ||
5. Revenue accruing from the administrative operation of the institutions || 59 || 67 || 267 ||
6. Contributions and refunds in connection with Union agreements and programmes || 50 || 50 || 2 921 ||
7. Interest on late payments and fines || 123 || 3 648 || 3 807 ||
8. Borrowing and lending operations || 0 || 0 || 0 ||
9. Miscellaneous revenue || 30 || 30 || 29 ||
Total || 128 761 || 135 431 || 138 849 ||
* including amending budgets 1.1.2 COMMITMENTS BY FINANCIAL FRAMEWORK HEADING EUR millions ||
Financial Framework Heading || Initial Budget || Final Budget* || Commitments ||
1. Sustainable growth || 67 506 || 70 842 || 69 000 ||
2. Preservation and mgt of natural resources || 59 976 || 62 198 || 60 817 ||
3. Citizenship, freedom, security, justice || 2 065 || 2 994 || 2 892 ||
4. The EU as a global player || 9 406 || 9 931 || 9 753 ||
5. Administration || 4 816 || 5 130 || 4 981 ||
6. Compensations || 0 || 0 || 0 ||
Total || 143 768 || 151 094 || 147 443 ||
* including amending budgets, appropriations carried over and assigned revenue
1.1.3 COMMITMENTS BY POLICY AREA || EUR millions
Policy Area || Initial Budget || Final Budget* || Commitments
01 Economic and financial affairs || 611 || 536 || 535
02 Enterprise || 1 148 || 1 276 || 1 236
03 Competition || 92 || 96 || 94
04 Employment and social affairs || 11 581 || 11 818 || 11 782
05 Agriculture and rural development || 58 587 || 60 877 || 59 514
06 Mobility and transport || 1 664 || 1 754 || 1 713
07 Environment and Climate action || 493 || 508 || 496
08 Research || 5 930 || 7 618 || 7 059
09 Information society and media || 1 678 || 1 985 || 1 878
10 Direct research || 411 || 932 || 494
11 Maritime affairs and Fisheries || 1 033 || 1 011 || 1 007
12 Internal market || 101 || 107 || 101
13 Regional policy || 42 045 || 42 662 || 42 647
14 Taxation and customs union || 143 || 147 || 144
15 Education and culture || 2 697 || 3 292 || 3 088
16 Communication || 262 || 271 || 265
17 Health and consumer protection || 687 || 653 || 639
18 Home affairs || 1 264 || 1 322 || 1 290
19 External relations || 4 817 || 4 969 || 4 872
20 Trade || 104 || 106 || 104
21 Development and relations with ACP States || 1 498 || 1 733 || 1 719
22 Enlargement || 1 088 || 1 166 || 1 135
23 Humanitarian aid || 900 || 1 299 || 1 294
24 Fight against fraud || 79 || 79 || 79
25 Commission's policy coord and legal advice || 194 || 204 || 196
26 Commission’s administration || 1 017 || 1 200 || 1 149
27 Budget || 69 || 63 || 61
28 Audit || 12 || 12 || 12
29 Statistics || 134 || 144 || 135
30 Pensions and related expenditure || 1 335 || 1 321 || 1 318
31 Language Services || 399 || 477 || 435
32 Energy || 718 || 764 || 731
33 Justice || 218 || 233 || 222
40 Reserves || 759 || 461 || 0
Total || 143 768 || 151 094 || 147 443
* including amending budgets, appropriations carried over and assigned revenue
1.1.4 EXPENDITURE BY FINANCIAL FRAMEWORK HEADING
EUR millions
Financial Framework Heading || Initial Budget || Final Budget* || Payments made
1. Sustainable growth || 55 337 || 63 753 || 61 585
2. Preservation and mgt of natural resources || 57 034 || 60 409 || 59 096
3. Citizenship, freedom, security, justice || 1 484 || 2 477 || 2 375
4. The EU as a global player || 6 955 || 7 182 || 7 064
5. Administration || 4 814 || 5 448 || 4 968
6. Compensations || 0 || 0 || 0
Total || 125 624 || 139 268 || 135 087
* including amending budgets, appropriations carried over and assigned revenue
1.1.5 EXPENDITURE BY POLICY AREA || EUR millions
Policy Area || Initial Budget || Final Budget* || Payments made
01 Economic and financial affairs || 511 || 493 || 484
02 Enterprise || 1 079 || 1 395 || 1 271
03 Competition || 92 || 103 || 92
04 Employment and social affairs || 9 075 || 11 755 || 11 699
05 Agriculture and rural development || 55 880 || 59 242 || 57 948
06 Mobility and transport || 1 079 || 1 156 || 1 105
07 Environment and Climate action || 393 || 409 || 382
08 Research || 4 218 || 6 245 || 5 307
09 Information society and media || 1 357 || 1 776 || 1 501
10 Direct research || 404 || 893 || 466
11 Maritime affairs and Fisheries || 806 || 757 || 745
12 Internal market || 98 || 112 || 99
13 Regional policy || 35 538 || 38 282 || 38 254
14 Taxation and customs union || 110 || 140 || 130
15 Education and culture || 2 112 || 3 059 || 2 761
16 Communication || 253 || 278 || 256
17 Health and consumer protection || 592 || 652 || 635
18 Home Affairs || 756 || 860 || 835
19 External relations || 3 276 || 3 271 || 3 233
20 Trade || 102 || 111 || 105
21 Development and relations with ACP States || 1 310 || 1 475 || 1 429
22 Enlargement || 921 || 976 || 943
23 Humanitarian aid || 842 || 1 141 || 1 128
24 Fight against fraud || 74 || 83 || 71
25 Commission's policy coord and legal advice || 193 || 219 || 195
26 Commission’s administration || 1 001 || 1 343 || 1 149
27 Budget || 69 || 73 || 61
28 Audit || 12 || 13 || 12
29 Statistics || 122 || 148 || 128
30 Pensions and related expenditure || 1 335 || 1 321 || 1 318
31 Language Services || 399 || 501 || 433
32 Energy || 1 339 || 782 || 723
33 Justice || 187 || 206 || 190
40 Reserves || 90 || 0 || 0
Total || 125 624 || 139 268 || 135 087
* including amending budgets, appropriations carried over and assigned revenue
In the initial adopted budget, signed on 1 December 2011, the amount of payment appropriations was EUR 129 088 million (of which EUR 125 624 million was for the Commission) and the amount to be financed by own resources totalled EUR 127 512 million. The revenue and expenditure estimates in the initial budget are typically adjusted during the budgetary year, such modifications being presented in amending budgets. Adjustments in the GNI-based own resources ensure that budgeted revenue matches exactly budgeted expenditure. In accordance with the principle of equilibrium, budget revenue and expenditure (payment appropriations) must be in balance.
Revenue:
During 2012 six amending budgets were adopted. Taking these into account, the total final revenue in the 2012 budget amounted to EUR 135 431 million. This was financed by own resources totalling EUR 128 655 million (thus EUR 1 143 million more than initially forecasted) and the remainder by other revenue. The increased need for financing payment appropriations was covered mainly from the inclusion of EUR 3 525 million relating to fines and interest on late payments in the Amending Budget no. 6/2012 under other revenue.
Concerning the own resources result, the collection of traditional own resources was close to the forecasted amounts. This was because the budget estimates that were modified at the time Amending Budget No. 4/2012 was established (they were decreased by EUR 1 520 million according to the new macroeconomic forecasts of spring 2012), were once again amended in the Amending Budget No. 6/2012 to take into account the actual rhythm of collection. Thus they were once again decreased, this time by EUR 950 million.
The final Member States' VAT and GNI payments also correspond closely to the final budget estimate. The differences between the forecasted amounts and the amounts actually paid are due to the differences between the euro rates used for budgetary purposes and the rates in force at the time when the Member States outside the EMU actually made their payments.
Expenditure:
The year 2012 was the sixth and penultimate year of the current programming period 2007-2013. All major programmes were at cruising speed, and the inflow of payment claims increased significantly, as is normal as the cycle draws to a close. In the general context of fiscal consolidation in the Member States, the voted budget for 2012 was rather conservative. This, combined with a significant amount of unpaid payment claims from 2011, and the mounting requests for reimbursements, created a high pressure on payment appropriations, which had to be addressed during the year through careful budgetary management, and ultimately through an amending budget.
For commitments, the authorised budget, and hence the political targets set, were fully implemented (99.9%). The most notable adjustments by means of amending budgets during the year concerned increases of EUR 650 million for ITER, in line with the December 2011 agreement on its financing, and EUR 688 million for the mobilisation of the European Union Solidarity Fund, unforeseeable expenditure by its very nature. Commitments were reduced by EUR 142.2 million in Amending Budget 6/2012, by returning unused amounts to the margin, in particular in relation to the reserve for international fisheries agreements, and animal disease eradication and monitoring programmes. The total implementation of budgeted commitment appropriations, being EUR 144 390 million of the total commitments made of EUR 147 443 million, left EUR 108 million unused. After the carryover to 2013, an amount of EUR 77 million lapses as well as the un-mobilised reserves: EUR 426 million for the European Globalisation Adjustment Fund, EUR 35 million for the Emergency Aid Reserve and EUR 5 million of other un-mobilised reserves.
The total implementation of budgeted payment appropriations, being EUR 131 722 million of the total payments of EUR 135 087 million, represents an implementation rate of 99.6 %. The total level of payment appropriations was increased at the end of the year through Amending Budget 6/2012 for an amount EUR 6 billion, increasing the initial budget by 4.8%. The shortage of payments affected nearly all headings, and in particular heading 1b Cohesion for Growth and Employment. It must also be recalled that the EUR 6 billion agreed was EUR 3 billion less that the amount requested by the Commission. Finally, the year 2012 ended with outstanding payment claims of EUR 16.2 billion for the current programming period of Cohesion Policy (2007-2013), and a further EUR 1.1 billion related to the closure of 2000-2006 programmes. These amounts will need to be paid in 2013. As in the case of commitments, the budget line for the European Union Solidarity Fund was reinforced by EUR 688 million in payment appropriations during the course of the year. The unused voted payment appropriations excluding the reserves amounted to EUR 560 million (2011: EUR 1 580 million) and after the carryover to 2013, a total of EUR 66 million (2011: EUR 560 million) lapses. Un-mobilised reserves amounted to EUR 12 million.
The detailed analysis of budgetary adjustments, their relevant context, their justification and their impact is presented in Commission's Report on Budgetary and Financial Management 2012, Part A "Overview at budget level" and Part B dealing with each heading of the multi-annual financial framework.
1.2 RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT
|| || EUR millions
|| 2012 || 2011
|| ||
ECONOMIC RESULT OF THE YEAR || (5 008) || (2 085)
|| ||
Revenue || ||
Entitlements established in current year but not yet collected || (1 986) || (360)
Entitlements established in previous years and collected in current year || 4 567 || 2 061
Accrued revenue (net) || (38) || (236)
|| ||
Expenses || ||
Accrued expenses (net) || (1 980) || 3 387
Amount from liaison account with Commission in EOA || 2 842 || 2 906
Expenses prior year paid in current year || (2 695) || (936)
Net-effect pre-financing || 1 233 || 1 144
Payment appropriations carried over to next year || (4 028) || (647)
Payments made from carry-overs and cancellation of unused payment appropriations || 4 203 || 1 469
Movement in provisions || 7 591 || (2 058)
Other || (700) || (293)
|| ||
BUDGET RESULT OF THE YEAR (COMMISSION)* || 4 001 || 4 352
|| ||
*Note that the budget result of the Commission is different from the EU budget result as it does not include the revenue and expenditure of the other Institutions.
The economic result of the year is calculated on the basis of accrual accounting principles. The budget result is however based on modified cash accounting rules, in accordance with the Financial Regulation. As both are the result of the same underlying transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expense items.
Reconciling items - Revenue
The actual budgetary revenue for a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years. Therefore the entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes as they do not form part of budgetary revenue. On the contrary the entitlements established in previous years and collected in current year must be added to the economic result for reconciliation purposes.
The net accrued revenue mainly consists of accrued revenue for agricultural levies, own resources and interests and dividends. Only the net-effect, i.e. accrued revenue for current year minus reversal accrued revenue from previous year, is taken into consideration.
Reconciling items - Expenses
The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of Community funds but not yet reported to the Commission.
While accrued expenses are not considered as budgetary expenditure, the payments made in the current year relating to invoices registered in prior years are part of current year's budgetary expenditure.
The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid in the current year and recognised as budgetary expenditure of the year and (2) the clearing of the pre-financing paid in current year or previous years through the acceptance of eligible costs. The latter represent an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.
Besides the payments made against the year's appropriations, the appropriations for that year that are carried to the next year also need to be taken into account in calculating the budget result of the year (in accordance with Article 15 of Regulation No 1150/2000). The same applies for the budgetary payments made in the current year from carry-overs and the cancellation of unused payment appropriations.
The movement in provisions relate to year-end estimates made in the accrual accounts (employee benefits mainly) that do not impact the budgetary accounts. Other reconciling amounts comprise different elements such as asset depreciation, asset acquisitions, capital lease payments and financial participations for which the budgetary and accrual accounting treatments differ.