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| 19.12.2006 | EN | Official Journal of the European Union | C 312/106 |
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19.12.2006

EN

Official Journal of the European Union

C 312/106

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REPORT

REPORT

on the annual accounts of the Office for Harmonisation in the Internal Market for the financial year 2005 together with the Office's replies

(2006/C 312/18)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

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

| 7-11 | OBSERVATIONS |
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7-11

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 information from the financial statements drawn up by the Office for the financial year 2005 is presented in Tables 2, 3 and 4. |
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2.

Table 1 summarises the Office's competences and activities. Key information from the financial statements drawn up by the Office for the financial year 2005 is presented in Tables 2, 3 and 4.

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

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

This Statement is addressed to the Office's Budget Committee pursuant to Article 137 of Council Regulation (EC) No 40/94.

| 4. | The Office's accounts for the financial year ended 31 December 2005 (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 give a statement of assurance 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 2005 (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 give a statement of assurance on their reliability and on the legality and regularity of the underlying transactions.

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| 5. | The Court conducted its audit in accordance with its policies and standards, which are based on international auditing standards that have been adapted to the Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and the underlying transactions are legal and regular. |
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5.

The Court conducted its audit in accordance with its policies and standards, which are based on international auditing standards that have been adapted to the Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and the underlying transactions are legal and regular.

| 6. | The Court has thus obtained a reasonable basis for the statement expressed below. |
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6.

The Court has thus obtained a reasonable basis for the statement expressed below.

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2005 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 2005 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. | As regards budgetary implementation, the overall implementation rates for commitment and payment appropriations for the financial year were 95 % and 80 % respectively. However, the consumption of appropriations was lower for administrative expenditure (Title II): around 10 % of the appropriations for this and the previous financial year were cancelled and one third of the commitments for this financial year were carried over. This situation should prompt the Office to improve the forecasting and planning of its administrative expenditure so as to avoid mobilising funds unnecessarily. |
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7.

As regards budgetary implementation, the overall implementation rates for commitment and payment appropriations for the financial year were 95 % and 80 % respectively. However, the consumption of appropriations was lower for administrative expenditure (Title II): around 10 % of the appropriations for this and the previous financial year were cancelled and one third of the commitments for this financial year were carried over. This situation should prompt the Office to improve the forecasting and planning of its administrative expenditure so as to avoid mobilising funds unnecessarily.

| 8. | The segregation of the duties of initiation and verification of budgetary operations was not completely guaranteed. Indeed, the audit showed that dozens of commitments and several hundred payments had both been initiated and validated by one and the same employee. |
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8.

The segregation of the duties of initiation and verification of budgetary operations was not completely guaranteed. Indeed, the audit showed that dozens of commitments and several hundred payments had both been initiated and validated by one and the same employee.

| 9. | In 2005, the Administrative Board had still not adopted any minimum internal control standards. Furthermore, the authorising officers had not yet formalised the management and internal control procedures and systems that they were applying. This being so, the accounting officer was not in a position to validate the systems intended to provide him with information. |
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9.

In 2005, the Administrative Board had still not adopted any minimum internal control standards. Furthermore, the authorising officers had not yet formalised the management and internal control procedures and systems that they were applying. This being so, the accounting officer was not in a position to validate the systems intended to provide him with information.

| 10. | An examination of a procedure for recruiting temporary staff showed some shortcomings: lack of a formal decision appointing selection boards, failure to specify the deadline for the submission of applications, lack of systematic use of evaluation scales, no minutes of selection board meetings, recruitment of two candidates where the vacancy notice specified only one recruitment. |
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10.

An examination of a procedure for recruiting temporary staff showed some shortcomings: lack of a formal decision appointing selection boards, failure to specify the deadline for the submission of applications, lack of systematic use of evaluation scales, no minutes of selection board meetings, recruitment of two candidates where the vacancy notice specified only one recruitment.

| 11. | The audit work on procurement and contract management revealed some anomalies: a lack of precision in the contract notices as to the nature of the contracts being published (works or supplies) (3), failure to adequately justify the use of the negotiated procedure for a contract extension (4), incomplete documentation of the procedure or inadequate application of the selection and evaluation criteria provided for in the contract notices (5), award of four specific contracts for a duration that overran the expiry date of the corresponding framework contracts by 11 months. |
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11.

The audit work on procurement and contract management revealed some anomalies: a lack of precision in the contract notices as to the nature of the contracts being published (works or supplies) (3), failure to adequately justify the use of the negotiated procedure for a contract extension (4), incomplete documentation of the procedure or inadequate application of the selection and evaluation criteria provided for in the contract notices (5), award of four specific contracts for a duration that overran the expiry date of the corresponding framework contracts by 11 months.

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4

5

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 28 September 2006.

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 28 February 2006 and received by the Court on 5 July 2006.

2

(3)  One case detected.

3

(4)  Extension involving a sum of 2 million euro.

4

(5)  In the case of four contracts.

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 | Governance | Resources available to the Office (2004) | Products and services supplied in 2005 |
| --- | --- | --- | --- | --- |
| 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

Governance

Resources available to the Office (2004)

Products and services supplied in 2005

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. |
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—

one representative of the Commission.

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.

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.

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.

2005 final budget

218 million euro (177 million euro) including a Community subsidy: 0 % (0 %)

Staff numbers as at 31 December 2005

Number of posts in establishment plan: 675 (675)

Posts occupied: 611 (648)

+78 (41) other staff (auxiliary contracts, seconded national experts, local staff, employment-agency staff)

Total staff: 689 (689)

assigned to the following duties:

| — | production: 548 (524) |
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—

production: 548 (524)

| — | support: 141 (165) |
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—

support: 141 (165)

Trade marks:

Number of applications: 64 112

Number of registrations: 60 570

Number of cases of opposition: 17 216

of which cases settled: 12 856

Appeals to the Boards of Appeal: 1 505

Average time for registration (excluding opposition or appeal):

| — | before publication: 10 months |
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—

before publication: 10 months

| — | between publication and registration: 11 months |
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—

between publication and registration: 11 months

Designs

Designs received: 63 700

Designs registered: 67 887

Source: Information sent by the Office.

Office for Harmonisation in the Internal Market

Source: Office data — These tables summarise the data supplied by the Office in its annual accounts.

Table 2

Office for Harmonisation in the Internal Market — Implementation of the budget for the financial year 2005

| (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 | Appropriations for the financial year and for the previous financial year |
| entered | committed | paid | carried over | cancelled | available | paid | cancelled | available | committed | paid | carried over | cancelled |
| Own revenue | 133 533 | 157 600 | Title I
  Staff | 58 165 | 57 072 | 55 680 | 995 | 1 491 | 1 001 | 669 | 332 | 59 166 | 58 073 | 56 349 | 995 | 1 823 |
| Other revenue | 404 | 905 | Title II
  Administration | 32 477 | 29 352 | 19 658 | 9 685 | 3 134 | 8 890 | 7 894 | 996 | 41 367 | 38 242 | 27 552 | 9 685 | 4 130 |
| Interest | 3 100 | 4 387 | Title III
  Operating activities | 38 669 | 36 884 | 22 613 | 14 226 | 1 829 | 16 323 | 16 198 | 125 | 54 992 | 53 207 | 38 811 | 14 226 | 1 954 |
| Balance from the previous financial year | 81 353 | 90 171 | Title X
  Reserve | 89 079 | 0 | 0 | 0 | 89 079 | 0 | 0 | 0 | 89 079 | 0 | 0 | 0 | 89 079 |
| Total | 218 390 | 253 063 | Total | 218 390 | 123 308 | 97 951 | 24 906 | 95 533 | 26 214 | 24 761 | 1 453 | 244 604 | 149 522 | 122 712 | 24 906 | 96 986 |

(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

Appropriations for the financial year and for the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

cancelled

available

committed

paid

carried over

cancelled

Own revenue

133 533

157 600

Title I

Staff

58 165

57 072

55 680

995

1 491

1 001

669

332

59 166

58 073

56 349

995

1 823

Other revenue

404

905

Title II

Administration

32 477

29 352

19 658

9 685

3 134

8 890

7 894

996

41 367

38 242

27 552

9 685

4 130

Interest

3 100

4 387

Title III

Operating activities

38 669

36 884

22 613

14 226

1 829

16 323

16 198

125

54 992

53 207

38 811

14 226

1 954

Balance from the previous financial year

81 353

90 171

Title X

Reserve

89 079

0

0

0

89 079

0

0

0

89 079

0

0

0

89 079

Total

218 390

253 063

Total

218 390

123 308

97 951

24 906

95 533

26 214

24 761

1 453

244 604

149 522

122 712

24 906

96 986

Table 3

Revenue and expenditure account for the financial year 2005 (1)

| (1000 euro) |
| --- |
| | 2005 |
| Operating revenue |
| Own revenue | 156 944 |
| Other subsidies/revenue | 823 |
| Total (a) | 157 767 |
| Operating expenditure |
| Staff | 56 278 |
| Administration | 28 610 |
| Operating activities | 35 850 |
| Total (b) | 120 738 |
| Operating result (c = a – b) | 37 029 |
| Other income (d) | 4 451 |
| Other charges (e) | 38 |
| Economic result (f = c + d – e) | 41 442 |

(1000 euro)

2005

Operating revenue

Own revenue

156 944

Other subsidies/revenue

823

Total (a)

157 767

Operating expenditure

Staff

56 278

Administration

28 610

Operating activities

35 850

Total (b)

120 738

Operating result (c = a – b)

37 029

Other income (d)

4 451

Other charges (e)

38

Economic result (f = c + d – e)

41 442

Table 4

Balance sheet at 31 December 2005 and 2004 (2)

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Assets |
| Fixed assets | 27 456 | 28 125 |
| Receivables | 2 196 | 3 233 |
| Cash and cash equivalents | 208 020 | 156 638 |
| Total | 237 672 | 187 996 |
| Liabilities |
| Accumulated surplus/deficit | 132 575 | 132 575 |
| Economic result for the year | 41 442 | 0 |
| Non-current liabilities | 613 | 784 |
| Current liabilities | 63 042 | 54 637 |
| Total | 237 672 | 187 996 |

(1000 euro)

2005

2004

Assets

Fixed assets

27 456

28 125

Receivables

2 196

3 233

Cash and cash equivalents

208 020

156 638

Total

237 672

187 996

Liabilities

Accumulated surplus/deficit

132 575

132 575

Economic result for the year

41 442

0

Non-current liabilities

613

784

Current liabilities

63 042

54 637

Total

237 672

187 996

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(1)  The data for the financial year 2004 are not presented as they are not comparable with those for 2005 because of the change in the accounting methods applied.

(2)  The data for the financial year 2004 have been restated in order to make them comparable with those for 2005.

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THE OFFICE'S REPLIES

| 7. | The Office will continue its efforts to improve the management of its budgetary credits. For the whole of its budget the Office managed to reduce the level of cancellations of carried over appropriations (from 10 % in 2004 to 6 % in 2005). |
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7.

The Office will continue its efforts to improve the management of its budgetary credits. For the whole of its budget the Office managed to reduce the level of cancellations of carried over appropriations (from 10 % in 2004 to 6 % in 2005).

| 8. | Following the Court's remark, in 2006 the Office has put into place procedures in order to minimize the cases in which a budgetary operation is treated by the same person acting as line manager and authorising officer. |
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8.

Following the Court's remark, in 2006 the Office has put into place procedures in order to minimize the cases in which a budgetary operation is treated by the same person acting as line manager and authorising officer.

| 9. | The internal control standards were adopted by the Budget Committee with a decision of 5 May 2006. The Office will take all the appropriate measures to implement these standards. |
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9.

The internal control standards were adopted by the Budget Committee with a decision of 5 May 2006. The Office will take all the appropriate measures to implement these standards.

| 10. | Following the Court's remark, the Office will take appropriate measures to reinforce its recruitment procedures by improving their formalisation and documentation. |
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10.

Following the Court's remark, the Office will take appropriate measures to reinforce its recruitment procedures by improving their formalisation and documentation.

| 11. | Following the Court's remark, the Office will take all the appropriate measures to correct the insufficiencies detected by better formalizing and documenting its procedures in this area. |
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11.

Following the Court's remark, the Office will take all the appropriate measures to correct the insufficiencies detected by better formalizing and documenting its procedures in this area.

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