# EUR-Lex - 52003TA1230(13) - EN

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# 52003TA1230(13)

**Report on the financial statements of the Office for Harmonization in the Internal Market for the financial year 2002, together with the Office's replies **

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Official Journal C 319 , 30/12/2003 P. 0083 - 0090 *

Report

on the financial statements of the Office for Harmonization in the Internal Market for the financial year 2002, together with the Office's replies

(2003/C 319/13)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the Budgetary Committee of the Office for Harmonization in the Internal Market (hereinafter "the Office") pursuant to Article 137(2) of Council Regulation (EC) No 40/94(1).

2. The Court has examined the financial statements of the Office for the financial year ended 31 December 2002. In accordance with Article 119(2)(c) of Council Regulation (EC) No 40/94, the Office's budget was implemented on the responsibility of its President. This responsibility includes the drawing-up and presentation of the financial statements(2), in accordance with the internal financial provisions provided for in Article 138 of Council Regulation (EC) No 40/94. The Court of Auditors is required pursuant to Article 248 of the Treaty establishing the European Community to examine these accounts.

3. The Court performed its audit in accordance with its auditing policies and standards. These have been adapted from generally accepted international auditing standards to reflect the specific characteristics of the Community context. The Court carried out such tests of the accounting records and other auditing procedures as it deemed necessary in the circumstances. By means of this audit, the Court obtained a reasonable basis for the opinion expressed below.

4. This examination has enabled the Court to obtain reasonable assurance that the annual accounts for the financial year ended 31 December 2002 are reliable and that the underlying transactions, taken as a whole, are legal and regular.

OBSERVATIONS

Introduction

5. The Office was set up by Council Regulation (EC) No 40/94 of 20 December 1993 in order to allow undertakings to have trade marks enabling them to protect their products or services in an identical manner throughout the entire area of the Union. The Office's brief was extended by Article 2 of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs(3) so that they enjoy the same protection at Community level. The Office operates in close collaboration with the national offices, which it pays for registering trade marks. Moreover, the Office has the judicial power to arbitrate in any disputes that may arise concerning trade marks.

Implementation of the budget

6. The implementation of the budget for the financial year 2002 and of the appropriations carried over from the previous financial year is set out in Table 1.

7. The most striking fact is the decrease in the fees received by the Office, which have fallen from 105,1 million euro in 2001 to 96,2 million euro in 2002, i.e. a drop of 8,9 million euro.

8. Revenue totalling 1,8 million euro that was charged to the financial year 2001 involved income which was recorded by the accounting officer in 2002 and should have been charged to the financial year 2002, as laid down in the Office's Financial Regulation(4).

9. Revenue totalling 0,8 million euro was received from the sales of publications in the fourth quarter of 2000 and the last three quarters of 2001. The Office did not take timely action to recover this sum from the Publications Office.

10. In 2002, the Office received 0,6 million euro from the Commission to carry out projects for which contracts totalling 1,7 million euro had been made with the Commission. The implementation of these projects was entered in the accounts outside the budget, which is not in accordance with the principle of budgetary unity.

Financial statements

11. The revenue and expenditure account and the balance sheet published by the Office in its activity report for the financial year 2002 are presented in summary form in Tables 2 and 3.

12. The allocation for the provision for procedural expenditure increased by 17 % in 2002 compared with 2001, while the total number of case-files submitted to the Office fell from 135822 to 121212, i.e. an 11 % reduction. Such a divergence in trends points to an increase in the time taken to process the files(5).

13. The Office's inventory includes goods which are no longer in use and nothing has been delisted since November 2000. The Office should attend to this problem when it makes its physical inventory, which it has introduced following the Court's previous recommendations(6).

Staff recruitment

14. In its report concerning the financial year 2000(7), the Court noted that the Office's recruitment policy led to recruitment on a local basis resulting in the integration as permanent officials of persons recruited by procedures which favour internal applicants. During the financial year 2002, out of 77 requests to fill a post, only four had been advertised widely outside the Office. An analysis of the movements of all the categories of staff during the financial year 2002 (see Table 4) confirms the internal nature of staff recruitment.

15. In order for equality of access to the Community public service to be better safeguarded, the Office should endeavour to advertise its employment offers very widely and, where possible, join forces with the institutions and other bodies for recruitment purposes.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 and 16 October 2003.

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 11, 14.1.1994.

(2) As required pursuant to Article 137(1) of Council Regulation (EC) No 40/94, the accounts of all the Office's revenue and expenditure for the financial year 2002 were drawn up on 28 February 2003 and sent to the Court of Auditors. These accounts were received by the Court on 2 April 2003. A summarised version of these accounts is presented in the tables annexed to this report.

(3) OJ L 3, 5.1.2001, p. 1.

(4) Articles 5(3) and 23 of the Office's Financial Regulation.

(5) This indication is borne out by the fact that the number of applications to register trade marks dropped by 5000 units betwen 2001 and 2002, while the number of corresponding research requests submitted to the national offices fell by 8000 units.

(6) Paragraphs 10 and 11, OJ C 326, 27.12.2002, p. 87.

(7) Paragraph 13 onwards, OJ C 372, 28.12.2001, p. 88.

Table 1

Office for Harmonisation in the Internal Market - Implementation of the budget for the financial year 2002NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Office's data. These tables summarise the data supplied by the Office in its own financial statements.

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Table 2

Office for Harmonisation in the Internal Market - Revenue and expenditure account for the financial years 2002 and 2001

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NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Office's data. These tables summarise the data supplied by the Office in its own financial statements.

Table 3

Office for Harmonisation in the Internal Market - Balance sheet as at 31 December 2002 and 31 December 2001NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Office data. These tables summarise the data supplied by the Office in its own financial statements.

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Table 4

Office for Harmonisation in the Internal Market - Changes in staff numbers during 2002

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Source:

Office data.

The Office's Replies

Budgetary execution

Revenue

The authorising officer signed the recovery order in 2001, whereas the financial controller and the accounting officer signed it only in 2002, thus giving rise to a minor incoherence with the formalities prescribed. The Office will make the necessary effort to avoid such problems in the future.

Sales of publications

The Office takes good note of this observation of the Court of Auditors. The collection of revenue of publications depends on the information provided by the Office for Official Publications of the European Communities, which has significant delays in its communication on publication sales to the Office. In the future the Office will claim the corresponding settlement list.

Assigned revenue

The Office takes good note of the observation and points out that it will study the possibility of including these activities under assigned revenue in its budget 2004.

Financial statements

Inventory

The reason for not having decided on the write-off of assets is due to the fact that the physical inventory was still ongoing. The Office is aware of this and will try to keep this information updated.

Recruitment of personnel

External recruitment has essentially been stopped on account of the economic situation. The Office has discontinued its policy of internal competitions for established posts and, at the same time, in order to fill certain vacancies and encourage mobility among its staff, published internal vacancy notices for a large number of posts at the Office.

The Office has already contacted the European Personnel Selection Office (EPSO) with a view to using its services as far as possible. However, the Office did launch a recruitment procedure at the beginning of 2003 to meet specific staffing needs associated with enlargement.