# EUR-Lex - 52003TA1230(02) - EN

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# 52003TA1230(02)

**Report on the financial statements of the European Agency for Safety and Health at Work for the financial year 2002, together with the Agency's replies **

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Official Journal C 319 , 30/12/2003 P. 0008 - 0014 *

Report

on the financial statements of the European Agency for Safety and Health at Work for the financial year 2002, together with the Agency's replies

(2003/C 319/02)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the European Parliament and to the Council in conformity with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002(1).

2. The Court has examined the Agency's financial statements for the financial year ended 31 December 2002. In accordance with Article 14(1) of Council Regulation (EC) No 2062/94, the budget was implemented on the responsibility of the director. This responsibility included the drawing-up and presentation of the financial statements(2) in accordance with the internal financial rules provided for under Article 15 of Council Regulation (EC) No 2062/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to examine these accounts.

3. The Court carried out 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 examined the accounting records and applied the audit procedures 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 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 Agency was set up by Council Regulation (EC) No 2062/94 of 18 July 1994(3) to collect technical, scientific and economic information useful for the promotion of health and safety at work and to pass it on to the Community bodies, Member States and interested parties. Its activities also extend to the Member States of EFTA and the 13 accession candidate countries. In order to achieve its objectives, it has set up a network comprising national centres in various participating countries and thematic centres. It works together with numerous Community and national bodies, especially the main health and safety bodies of the Member States.

Implementation of the budget

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

7. The appropriations available for the financial year amounted to 20 million euro, consisting of 13,2 million euro of the financial year and 6,8 million in carryovers from the previous financial year. Of the 2002 appropriations, a total of 12,5 million euro was committed and payments of 6,2 million euro made against them. The balance of appropriations was either carried over (6 million) or cancelled. The carryovers mainly concerned Title III of the budget and represented more than 70 % of the commitments entered into. The Court once again(4) draws the Agency's attention to the fact that it should programme its activities in a way that complies better with the annuality principle and should also improve the monitoring of its activities.

8. Article 6(4) of the Agency's financial regulation provides that the amount of appropriations to be carried over should be established before the end of the financial year. In March 2003, however, an amount of 202500 euro was carried over from the financial year 2002 to the financial year 2003.

9. Generally speaking, the audit of the budgetary accounts revealed shortcomings in the coordination between the authorising officer for expenditure and the department responsible for financial monitoring. Moreover, there was no formal procedure for reconciling the authorising officer for expenditure's estimates of the volume of appropriations to be carried over with the amounts calculated on the basis of the financial department's accounts. The Agency should take the necessary steps to improve the effectiveness of its internal control system.

Financial statements

10. Tables 2 and 3 set out in summary form the revenue and expenditure account and balance sheet published by the Agency in its Activity Report for the financial year 2002.

11. No physical inventory has been taken since 1997. The inventory lists are not reliable. They contain inaccuracies, are not complete and do not take into account disposals that should have been carried out. Moreover, despite the Court's previous recommendations(5), in which it asked the Agency to apply the rules adopted by the Commission(6), the Agency does still not carry out any depreciation of its fixed assets.

Legality and regularity of the underlying transactions

12. The Agency financed 51 projects under a 4 million euro programme in favour of small and medium-sized enterprises. Checks carried out on a sample of seven projects showed up various failings. No formal procedure was introduced for carrying out on-the-spot checks of the reality of expenditure declared by beneficiaries. In four cases(7), the Agency's final evaluation report showed significant differences between the product promised by the beneficiaries and the final product; nevertheless, the aid was paid in full, or almost in full. The Court draws attention to the responsibility of the competent departments and recommends that appropriate measures be introduced.

13. The Agency concluded a number of contracts for various technical and administrative services. These contracts were poorly monitored. In five cases they were extended without any legal basis.

14. The decision setting up the imprest account should be amended, the ceiling on it (60000 euro) should be lowered to take into account its actual utilisation and the procedures for operating it should also be reviewed.

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

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 248, 16.9.2002, p. 1.

(2) In accordance with Article 14(3) of Council Regulation (EC) No 2062/94, the accounts for all the Agency's revenue and expenditure for the financial year 2002 were drawn up on 27 June 2003 and forwarded to the Court of Auditors, which received them on 12 September 2003. A short form of these financial statements is presented in the tables annexed to this report.

(3) OJ L 216, 20.7.1994, p. 1.

(4) See paragraph 7 of the Report on the financial statements of the Agency for the financial year 2001 (OJ C 326, 27.12.2002, p. 10).

(5) See paragraph 10 of the Report on the financial statements of the Agency for the financial year 2001 (OJ C 326, 27.12.2002, p. 10).

(6) Commission Regulation (EC) No 2909/2000 of 29 December 2000 (OJ L 336, 30.12.2002, p. 75).

(7) Total amount: 353000 euro.

Table 1

European Agency for Safety and Health at Work - Implementation of the budget for the financial year 2002NB:

Differences in totals are due to the effects of rounding.

Source:

The Agency's data. The table presents, in summary form, the data provided by the Agency in its own financial statement.

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Table 2

European Agency for Safety and Health at Work - Revenue and expenditure account for the financial years 2002 and 2001

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NB:

Differences in totals are due to the effects of rounding.

Source:

European Agency for Safety and Health at Work.

Table 3

European Agency for Safety and Health at Work - Balance sheet at 31 December 2002 and 31 December 2001NB:

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

Source:

European Agency for Safety and Health at Work.

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The Agency's replies

7. The Agency notes the comment of the Court. The Agency wishes to note the fact that 60 % of the total carryovers are for the SME scheme, which has a strict two-year implementation cycle.

In the framework of the new Financial Regulation, the Agency is looking into options to properly implement the programmes and, simultaneously, to respect the principle of annuality of the budget.

8. The Agency notes the comment of the Court of Auditors, and will establish appropriate mechanisms to avoid this type of occurrence.

10. The Agency notes the comment. At the end of 2002, the Agency put in place a new controller's function, to improve its systems of internal control. Further substantial improvements are expected when the ongoing internal restructuring of the Agency is fully implemented.

12. Early in the year 2003, the Agency contracted an accounting firm to undertake a complete updating of all aspects of the management of its fixed asset, in accordance to the EU financial rules. The work is expected to be finalised this year, in order to reflect the new value of the Agency's fixed assets into the 2003 accounts.

13. The Agency would like to draw the attention of the Court to the fact that all available resources have been dedicated to conducting an in-depth assessment of the final activity reports and the final financial reports provided by the 51 project holders.

Following those examinations, the Agency did not pay the full grant to half of the project holders. In the four specific cases mentioned by the Court, the Agency considered that despite the shortcomings in the final products the objectives of the project were reasonably achieved and, consequently, that the project holders deserved the full payment of the grant. The Agency will examine the possibility of carrying out checks at project holder level during the implementation of the scheme in 2003.

14. To eliminate the type of problems mentioned by the Court, the Agency has developed a database for contract management, and is in the process of recruiting a "general services officer" responsible for the management of service contracts.

15. The cash imprest account has been replaced by a new one at a considerable lower level, more appropriate to the present Agency needs.