11.1 The report reviews the financial statements, efficiency, management of the operational budget and implementation of the programme in Kosovo of the European Agency for Reconstruction (EAR) in the year 2000. The EAR was established in November 1999 in response to the urgent need for reconstruction in Kosovo, following the 1999 conflict. In 2000, it managed a budget of €266 million. The audit was carried out between November 2000 and May 2001, and examined financial statements for the financial year ending 31 December 2000.
11.2 The administration and management of the budget in 2000 were found to be highly efficient, but the Court commented that the low ratio of employees to the total value of aid managed could be a risk factor, affecting sustainability. The report identified the key strengths of the programme in 2000 as its clear focus on a manageable number of priority areas, the high quality and dedication of its staff, flexible application of the rules, and rapid contracting and disbursement of funds. The report also made a number of suggestions for improvements.
11.3 When we considered the report in January, we agreed with the Secretary of State that the European Agency for Reconstruction provided useful lessons for other EC agencies. We cleared the document but referred it to the International Development Committee for consideration in connection with its inquiry into the Effectiveness of the reforms of European Development Assistance. The Chairman of that Committee now writes to draw our attention to a comment in its Report, in which it says:
"The European Scrutiny Committee referred to us a European Court of Auditors Report concerning the financial accounts of the European Agency for Reconstruction and the implementation of aid for Kosovo for the year 2000. This report concurs with our view - paras. 51 to 53 - about the importance of appropriate and adequate staffing".