# C_2007309EN.01014101.xml

| 19.12.2007 | EN | Official Journal of the European Union | C 309/141 |
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19.12.2007

EN

Official Journal of the European Union

C 309/141

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REPORT

REPORT

on the annual accounts of the Office for Harmonisation in the Internal Market for the financial year 2006 together with the Office's replies

(2007/C 309/24)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | STATEMENT OF ASSURANCE |
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3-6

| 7-9 | OBSERVATIONS |
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7-9

Tables 1 to 4

The Office's replies

The Office's replies

INTRODUCTION

| 1. | The Office for Harmonisation in the Internal Market (hereinafter ‘the Office’) was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Community legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union. |
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1.

The Office for Harmonisation in the Internal Market (hereinafter ‘the Office’) was set up by Council Regulation (EC) No 40/94 (1) of 20 December 1993. Its mandate is to implement the Community legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union.

1

| 2. | Table 1 summarises the Office's competences and activities. Key data summarised from the financial statements drawn up by the Office for the financial year 2006 is presented in Tables 2, 3 and 4 for information purposes. |
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2.

Table 1 summarises the Office's competences and activities. Key data summarised from the financial statements drawn up by the Office for the financial year 2006 is presented in Tables 2, 3 and 4 for information purposes.

Table 1

Tables 2, 3

4

STATEMENT OF ASSURANCE

| 3. | This Statement is addressed to the Office Budget Committee in accordance with Article 137 of Council Regulation (EC) No 40/94. |
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3.

This Statement is addressed to the Office Budget Committee in accordance with Article 137 of Council Regulation (EC) No 40/94.

| 4. | The Office's accounts for the financial year ended 31 December 2006 (2) were drawn up by its President, pursuant to Article 119 of Council Regulation (EC) No 40/94, and sent to the Court, which is required to provide a statement on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Office's accounts for the financial year ended 31 December 2006 (2) were drawn up by its President, pursuant to Article 119 of Council Regulation (EC) No 40/94, and sent to the Court, which is required to provide a statement on their reliability and on the legality and regularity of the underlying transactions.

2

| 5. | The Court conducted its audit in accordance with the IFAC and INTOSAI International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular. |
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5.

The Court conducted its audit in accordance with the IFAC and INTOSAI International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular.

| 6. | The Court has thus obtained a reasonable basis for the Statement set out below.

  Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question. |
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6.

The Court has thus obtained a reasonable basis for the Statement set out below.

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Office's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

OBSERVATIONS

| 7. | Implementation of the budget was characterised by a significant increase in revenue (27 % higher than the initial budget) and a lower overall level of expenditure resulting in a budgetary surplus of 69 million euro. The implementation rates for the commitment and payment appropriations were 92,7 % and 72,6 % respectively. Around 15 % of the appropriations for administrative expenditure (Title II) for the year and those carried over from the previous financial year were cancelled. More than one third of the commitments for the 2006 financial year were carried over. A high number of budgetary transfers were made (3). All transfers initiated in one day or within defined short periods are not processed for approval together. Thus, the budgetary principles of annuality and specification were not strictly observed. |
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7.

Implementation of the budget was characterised by a significant increase in revenue (27 % higher than the initial budget) and a lower overall level of expenditure resulting in a budgetary surplus of 69 million euro. The implementation rates for the commitment and payment appropriations were 92,7 % and 72,6 % respectively. Around 15 % of the appropriations for administrative expenditure (Title II) for the year and those carried over from the previous financial year were cancelled. More than one third of the commitments for the 2006 financial year were carried over. A high number of budgetary transfers were made (3). All transfers initiated in one day or within defined short periods are not processed for approval together. Thus, the budgetary principles of annuality and specification were not strictly observed.

3

| 8. | The accumulated surplus in 2006 reached 200 million euro, the equivalent of the annual budget. On the basis of the recent analysis made, there was a need for the Office to propose to the Commission a level of fees which more accurately reflects its real costs (4). |
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8.

The accumulated surplus in 2006 reached 200 million euro, the equivalent of the annual budget. On the basis of the recent analysis made, there was a need for the Office to propose to the Commission a level of fees which more accurately reflects its real costs (4).

4

| 9. | The examination of procedures for recruiting staff showed the following shortcomings: a lack of formal decisions in appointing selection boards, selection board incomplete once having been set up, parity of members of the selection board not assured and no minutes of the selection board meetings. Written procedures and guidelines for the recruitment of temporary staff have not yet been adopted and implemented (5). |
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9.

The examination of procedures for recruiting staff showed the following shortcomings: a lack of formal decisions in appointing selection boards, selection board incomplete once having been set up, parity of members of the selection board not assured and no minutes of the selection board meetings. Written procedures and guidelines for the recruitment of temporary staff have not yet been adopted and implemented (5).

5

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 27 September 2007.

For the Court of Auditors

Hubert WEBER

President

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(1)  OJ L 11, 14.1.1994

1

(2)  These accounts were drawn up on 1 July 2007 and received by the Court on 2 July 2007.

2

(3)  During 2006 there were more than 30 transfers.

3

(4)  Article 134(2) of the Council Regulation (EC) No 40/94 of 20 December 1993.

4

(5)  Article 12(5) of the Conditions of Employment of other servants of the EC.

5

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Table 1

Office for Harmonisation in the Internal Market (Alicante)

| Area of Community competence deriving from the Treaty | Competences of the Office as specified in Council Regulation (EC) No 40/94 of 20 December 1993 | Gouvernance | Resources made available to the Office in 2006

  (2005) | Products and services supplied in the 2006 financial year |
| --- | --- | --- | --- | --- |
| Free movement of goods

  Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

  (From Article 30 of the Treaty)

  Restrictions on freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

  (From Article 49 of the Treaty) | Objectives

  To implement the Community legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union. | Tasks







  — | To receive and enter applications for registration. |

Area of Community competence deriving from the Treaty

Competences of the Office as specified in Council Regulation (EC) No 40/94 of 20 December 1993

Gouvernance

Resources made available to the Office in 2006

(2005)

Products and services supplied in the 2006 financial year

Free movement of goods

Prohibitions or restrictions justified on grounds of the protection of industrial and commercial property must not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

(From Article 30 of the Treaty)

Restrictions on freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

(From Article 49 of the Treaty)

Objectives

To implement the Community legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union.

Tasks

—

To receive and enter applications for registration.

| — | To examine the conditions for entry in the Register and compatibility with Community legislation. |
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—

To examine the conditions for entry in the Register and compatibility with Community legislation.

| — | To search at the industrial property offices of the Member States for any pre-existing national trade marks. |
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—

To search at the industrial property offices of the Member States for any pre-existing national trade marks.

| — | To publish applications. |
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—

To publish applications.

| — | To examine any opposition by third parties. |
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—

To examine any opposition by third parties.

| — | To register or reject applications. |
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—

To register or reject applications.

| — | To examine applications for revocation or invalidity. |
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—

To examine applications for revocation or invalidity.

| — | To handle appeals against decisions. |
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—

To handle appeals against decisions.

1.   Administrative Board

Composition

| — | One representative of each Member State |
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—

One representative of each Member State

| — | One representative of the Commission and their alternates |
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—

One representative of the Commission and their alternates

Task

| — | To advise the President on matters for which the Office is responsible |
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—

To advise the President on matters for which the Office is responsible

| — | To prepare lists of candidates (Article 120) for President, Vice-Presidents and chairmen and members of the Boards of Appeal |
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—

To prepare lists of candidates (Article 120) for President, Vice-Presidents and chairmen and members of the Boards of Appeal

2.   President of the Office

| — | Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board |
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—

Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board

3.   Budget Committee

Composition

One representative of each Member State and one representative of the Commission and their alternates

Task

| — | To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports |
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—

To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports

4.   Decisions in connection with procedures

Decisions are taken by:

| (a) | the Examiners; |
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(a)

the Examiners;

| (b) | the Opposition Divisions; |
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(b)

the Opposition Divisions;

| (c) | the Administration of Trade Marks and Legal Division; |
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(c)

the Administration of Trade Marks and Legal Division;

| (d) | the Cancellation Divisions; |
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(d)

the Cancellation Divisions;

| (e) | the Boards of Appeal |
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(e)

the Boards of Appeal

5.   External audit

The Court of Auditors

6.   Discharge authority

The Office's Budget Committee

Final budget

212 million euro (218 million euro) including a Community subsidy: 0 % (0%)

Staff numbers as at 31 December 2006

675 (675) posts in the establishment plan,

posts occupied: 603 (611)

+72 (78) other staff (auxiliary contracts, seconded national experts, local and employment agency staff)

Total staff: 675 (689)

assigned to the following duties:

| — | production: 480 (548) |
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—

production: 480 (548)

| — | support: 195 (141) |
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—

support: 195 (141)

Trade marks

Number of applications: 77 461

Number of registrations: 66 954

Number of cases of opposition: 13 995

of which cases settled: 13 979

Appeals to the Boards of Appeal: 1 659

Average time for registration (excluding opposition or appeal):

| — | before publication: 8 months |
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—

before publication: 8 months

| — | between publication and registration: 6 months |
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—

between publication and registration: 6 months

Designs

Designs received: 68 500

Designs registered: 69 555

Source: Information supplied by the Office.

Source: Data supplied by the Office. This table summarises the data supplied by the Office in its annual accounts: these accounts are drawn up on an accrual basis.

Table 2

Office for Harmonisation in the Internal Market (Alicante) — Implementation of the budget for the financial year 2006

| (1000 euro) |
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| Revenue | Expenditure |
| Source of revenue | Revenue entered in the final budget for the financial year | Revenue received | Allocation of expenditure | Final budget appropriations | Appropriations carried over from the previous financial year |
| entered | committed | paid | carried over | cancelled | available | paid | cancelled |
| Own revenue | 146 723 | 184 020 | Title I
  Staff | 60 431 | 59 348 | 56 758 | 1 390 | 2 283 | 995 | 835 | 160 |
| Other revenue | 709 | 553 | Title II
  Administration | 37 772 | 31 337 | 20 639 | 10 691 | 6 442 | 9 685 | 8 866 | 819 |
| Interest | 4 500 | 7 692 | Title III
  Operating activities | 36 541 | 35 371 | 20 963 | 14 407 | 1 170 | 14 226 | 13 015 | 1 212 |
| Balance of the previous financial year | 59 797 | 59 296 | Title X
  Reserve | 76 985 | 0 | 0 | 0 | 76 985 | 0 | 0 | 0 |
| Total | 211 729 | 251 561 | Total | 211 729 | 126 056 | 98 360 | 26 488 | 86 880 | 24 906 | 22 716 | 2 191 |
| Source: Data supplied by the Office. This table summarises the data provided by the Office in its annual accounts. Revenue collected and payments are estimated on a cash basis. |

(1000 euro)

Revenue

Expenditure

Source of revenue

Revenue entered in the final budget for the financial year

Revenue received

Allocation of expenditure

Final budget appropriations

Appropriations carried over from the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

Own revenue

146 723

184 020

Title I

Staff

60 431

59 348

56 758

1 390

2 283

995

835

160

Other revenue

709

553

Title II

Administration

37 772

31 337

20 639

10 691

6 442

9 685

8 866

819

Interest

4 500

7 692

Title III

Operating activities

36 541

35 371

20 963

14 407

1 170

14 226

13 015

1 212

Balance of the previous financial year

59 797

59 296

Title X

Reserve

76 985

0

0

0

76 985

0

0

0

Total

211 729

251 561

Total

211 729

126 056

98 360

26 488

86 880

24 906

22 716

2 191

Source: Data supplied by the Office. This table summarises the data provided by the Office in its annual accounts. Revenue collected and payments are estimated on a cash basis.

Table 3

Office for Harmonization in the Internal Market (Alicante) — Economic outturn account for the financial years 2006 and 2005

| (1000 euro) |
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| | 2006 | 2005 |
| Operating revenue |
| Revenue from fees | 184 066 | 156 945 |
| Revenue from the sale of publications | 285 | 512 |
| Other revenue | 172 | 310 |
| Total (a) | 184 523 | 157 767 |
| Operating expenses |
| Staff expenses | 58 055 | 56 278 |
| Fixed asset related expenses | 3 586 | 3 386 |
| Other administrative expenses | 26 833 | 25 224 |
| Operational expenses | 34 720 | 35 850 |
| Total (b) | 123 194 | 120 738 |
| Surplus/(deficit) from operating activities (c = a – b) | 61 329 | 37 029 |
| Financial operations revenues (e) | 8 149 | 4 451 |
| Financial operations expenses (f) | 63 | 38 |
| Surplus/(deficit) from non-operating activities (g = e – f) | 8 086 | 4 413 |
| Economic result for the year (h = c + g) | 69 415 | 41 442 |

(1000 euro)

2006

2005

Operating revenue

Revenue from fees

184 066

156 945

Revenue from the sale of publications

285

512

Other revenue

172

310

Total (a)

184 523

157 767

Operating expenses

Staff expenses

58 055

56 278

Fixed asset related expenses

3 586

3 386

Other administrative expenses

26 833

25 224

Operational expenses

34 720

35 850

Total (b)

123 194

120 738

Surplus/(deficit) from operating activities (c = a – b)

61 329

37 029

Financial operations revenues (e)

8 149

4 451

Financial operations expenses (f)

63

38

Surplus/(deficit) from non-operating activities (g = e – f)

8 086

4 413

Economic result for the year (h = c + g)

69 415

41 442

Table 4

Office for Harmonization in the Internal Market (Alicante) — Balance sheet at 31 December 2006 and 2005

| (1000 euro) |
| --- |
| | 2006 | 2005 |
| Non-current assets |
| Intangible fixed assets | 1 023 | 829 |
| Tangible fixed assets | 25 948 | 26 627 |
| Current assets |
| Short-term pre-financing | 190 | 185 |
| Short-term receivables | 2 453 | 2 011 |
| Cash and cash equivalents | 281 510 | 208 020 |
| Total assets | 311 125 | 237 672 |
| Non-current liabilities |
| Provisions for risks and charges | 727 | 597 |
| Other long-term liabilities | 20 | 16 |
| Current liabilities |
| Provisions for risks and charges | 12 266 | 10 499 |
| Accounts payable | 54 681 | 52 544 |
| Total liabilities | 67 693 | 63 656 |
| Net assets |
| Reserves | 72 353 | — |
| Accumulated surplus/deficit | 101 663 | 132 575 |
| Economic result of the year | 69 415 | 41 442 |
| Total net assets | 243 431 | 174 017 |
| Total liabilities and net assets | 311 125 | 237 672 |

(1000 euro)

2006

2005

Non-current assets

Intangible fixed assets

1 023

829

Tangible fixed assets

25 948

26 627

Current assets

Short-term pre-financing

190

185

Short-term receivables

2 453

2 011

Cash and cash equivalents

281 510

208 020

Total assets

311 125

237 672

Non-current liabilities

Provisions for risks and charges

727

597

Other long-term liabilities

20

16

Current liabilities

Provisions for risks and charges

12 266

10 499

Accounts payable

54 681

52 544

Total liabilities

67 693

63 656

Net assets

Reserves

72 353

—

Accumulated surplus/deficit

101 663

132 575

Economic result of the year

69 415

41 442

Total net assets

243 431

174 017

Total liabilities and net assets

311 125

237 672

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THE OFFICE'S REPLIES

| 7. | The Office is continuing its efforts to improve its forecasts of its revenue and expenditure. The significant amount of carried over appropriations form 2006 to 2007 is mainly due to delays of some IT projects. The Office has put in April 2007 an improved procedure for handling transfers. |
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7.

The Office is continuing its efforts to improve its forecasts of its revenue and expenditure. The significant amount of carried over appropriations form 2006 to 2007 is mainly due to delays of some IT projects. The Office has put in April 2007 an improved procedure for handling transfers.

| 8. | The Office takes good note of the observations of the Court of Auditors. In December 2006, the Commission made proposals for a new fee mechanism. The Council, in May 2007, asked the Commission to make a proposal for a substantial reduction. |
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8.

The Office takes good note of the observations of the Court of Auditors. In December 2006, the Commission made proposals for a new fee mechanism. The Council, in May 2007, asked the Commission to make a proposal for a substantial reduction.

| 9. | In 2006, the Office has already improved the formalising of its procedures regarding human resources management and in particular recruitment. In 2007, this effort will be pursued to take account of the Court's remarks. |
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9.

In 2006, the Office has already improved the formalising of its procedures regarding human resources management and in particular recruitment. In 2007, this effort will be pursued to take account of the Court's remarks.

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