# C_2006312EN.01007301.xml

| 19.12.2006 | EN | Official Journal of the European Union | C 312/73 |
| --- | --- | --- | --- |

19.12.2006

EN

Official Journal of the European Union

C 312/73

---

REPORT

REPORT

on the annual accounts of the European Training Foundation for the financial year 2005 together with the Foundation's replies

(2006/C 312/13)

CONTENTS

| 1-2 | INTRODUCTION |
| --- | --- |

1-2

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

3-6

| 7-11 | OBSERVATIONS |
| --- | --- |

7-11

Tables 1 to 4

Foundation's replies

Foundation's replies

INTRODUCTION

| 1. | The European Training Foundation (hereinafter called the Foundation) was created by Council Regulation (EEC) No 1360/90 of 7 May 1990 (1). The Foundation's purpose is to support the reform of vocational training in the European Union's partner countries. As such, it assists the Commission in the implementation of various programmes (PHARE, TACIS, CARDS and MEDA). |
| --- | --- |

1.

The European Training Foundation (hereinafter called the Foundation) was created by Council Regulation (EEC) No 1360/90 of 7 May 1990 (1). The Foundation's purpose is to support the reform of vocational training in the European Union's partner countries. As such, it assists the Commission in the implementation of various programmes (PHARE, TACIS, CARDS and MEDA).

1

| 2. | Table 1 summarises the competences and activities of the Foundation. Key information, taken from the financial statements drawn up by the Foundation for the financial year 2005, is presented in Tables 2, 3 and 4. |
| --- | --- |

2.

Table 1 summarises the competences and activities of the Foundation. Key information, taken from the financial statements drawn up by the Foundation 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 of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up following an examination of the Foundation's accounts, as required by Article 248 of the Treaty establishing the European Community. |
| --- | --- |

3.

This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up following an examination of the Foundation's accounts, as required by Article 248 of the Treaty establishing the European Community.

2

| 4. | The Foundation's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Executive Director, pursuant to Article 11 of Regulation (EEC) No 1360/90, and sent to the Court, which is required to deliver a Statement of Assurance on the reliability and on the legality and regularity of the underlying transactions. |
| --- | --- |

4.

The Foundation's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Executive Director, pursuant to Article 11 of Regulation (EEC) No 1360/90, and sent to the Court, which is required to deliver a Statement of Assurance on the reliability and on the legality and regularity of the underlying transactions.

3

| 5. | The Court conducted an 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. |
| --- | --- |

5.

The Court conducted an 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 obtained a reasonable basis for the opinion expressed below. |
| --- | --- |

6.

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

Reliability of the accountsThe Foundation'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 Foundation'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 Foundation'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 Foundation'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. | Although the commitment rate for the appropriations for the financial year is high (practically 100 % for the Foundation's own activities), the Foundation's attention is drawn to the high rate (over 40 %) of carry-overs of commitments for operating activities (Title III). A similar situation prevails for the implementation of MEDA and Tempus activities. The Foundation should ensure that it programmes its activities better. |
| --- | --- |

7.

Although the commitment rate for the appropriations for the financial year is high (practically 100 % for the Foundation's own activities), the Foundation's attention is drawn to the high rate (over 40 %) of carry-overs of commitments for operating activities (Title III). A similar situation prevails for the implementation of MEDA and Tempus activities. The Foundation should ensure that it programmes its activities better.

| 8. | As in previous years, and in infringement of its financial regulation, the Foundation only published a summary of its budget in the Official Journal. The budget nomenclature lacks balance: two items contain amounts that represent nearly 10 % of its budget. Moreover, most of the budget headings for operating expenditure (Title III) are broken down in a detailed manner at item level according to the destination principle. The level of detail is such as to require numerous transfers. Furthermore, a lack of coordination between the financial unit and the operational units leads to additional transfers. |
| --- | --- |

8.

As in previous years, and in infringement of its financial regulation, the Foundation only published a summary of its budget in the Official Journal. The budget nomenclature lacks balance: two items contain amounts that represent nearly 10 % of its budget. Moreover, most of the budget headings for operating expenditure (Title III) are broken down in a detailed manner at item level according to the destination principle. The level of detail is such as to require numerous transfers. Furthermore, a lack of coordination between the financial unit and the operational units leads to additional transfers.

| 9. | The final accounts have been characterised by delays and difficulties to establish them in compliance with existing rules. |
| --- | --- |

9.

The final accounts have been characterised by delays and difficulties to establish them in compliance with existing rules.

| 10. | The Foundation has still not finished introducing its system of internal control. There is no complete description of the systems of internal control or even a formal account of the procedures used. There is no analysis of operational risks and the ex-post checks have still not been set up. Moreover, the accounting officer has not yet validated the accounts information and inventory systems. Generally speaking, the supervision and control of operations and financial and budgetary reports are inadequate. Given the risks associated with this situation, the Foundation should make it a priority to resolve it. |
| --- | --- |

10.

The Foundation has still not finished introducing its system of internal control. There is no complete description of the systems of internal control or even a formal account of the procedures used. There is no analysis of operational risks and the ex-post checks have still not been set up. Moreover, the accounting officer has not yet validated the accounts information and inventory systems. Generally speaking, the supervision and control of operations and financial and budgetary reports are inadequate. Given the risks associated with this situation, the Foundation should make it a priority to resolve it.

| 11. | Shortcomings in the field of documentation were found in two staff selection procedures: the rejection of applicants without justification in the files (4) and the lack of information on the criteria used for selecting the candidates in the pre-selection phase. |
| --- | --- |

11.

Shortcomings in the field of documentation were found in two staff selection procedures: the rejection of applicants without justification in the files (4) and the lack of information on the criteria used for selecting the candidates in the pre-selection phase.

4

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

---

(1)  OJ L 131, 23.5.1990.

1

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

2

(3)  These accounts were drawn up on 30 August 2006 and received by the Court on 14 September 2006.

3

(4)  No documentation was found in the files on the reasons for which candidates were not invited for interviews.

4

---

Table 1

European Training Foundation (Turin)

| Areas of Community competence deriving from the Treaty | Competences of the Foundation
  Council Regulation (EEC) No 1360/90 of 7 May 1990 | Governance | Resources made available to the Foundation

  (2004 data) | Products and services supplied |
| --- | --- | --- | --- | --- |
| ‘The Community shall carry out, within its spheres of competence, economic, financial and technical cooperation measures with third countries. Such measures shall be complementary to those carried out by the Member States and consistent with the development policy of the Community’.

  (Article 181 A) | Objectives:







  — | to contribute to the development of the professional training systems of Central and Eastern Europe and the independent states of the former Soviet Union benefiting from the programme to assist economic reform and recovery in the New Independent States and Mongolia and of non- Member Mediterranean countries benefiting from financial and technical accompanying measures for the reform of their economic and social structures, |

Areas of Community competence deriving from the Treaty

Competences of the Foundation

Council Regulation (EEC) No 1360/90 of 7 May 1990

Governance

Resources made available to the Foundation

(2004 data)

Products and services supplied

‘The Community shall carry out, within its spheres of competence, economic, financial and technical cooperation measures with third countries. Such measures shall be complementary to those carried out by the Member States and consistent with the development policy of the Community’.

(Article 181 A)

Objectives:

—

to contribute to the development of the professional training systems of Central and Eastern Europe and the independent states of the former Soviet Union benefiting from the programme to assist economic reform and recovery in the New Independent States and Mongolia and of non- Member Mediterranean countries benefiting from financial and technical accompanying measures for the reform of their economic and social structures,

| — | to promote the coordination of the assistance given to eligible countries. |
| --- | --- |

—

to promote the coordination of the assistance given to eligible countries.

Tasks:

in accordance with the general guidelines laid down by the Community, the ETF operates in the field of training, covering, professional, initial and lifelong training and the retraining of young people and adults via the following tasks:

| — | assistance in defining training needs and priorities via the implementation of technical assistance measures in the training field and via cooperation with the appropriate designated bodies in the eligible countries, |
| --- | --- |

—

assistance in defining training needs and priorities via the implementation of technical assistance measures in the training field and via cooperation with the appropriate designated bodies in the eligible countries,

| — | acts as a clearing house to provide the Community, its Member States and the non-Member States concerned information on current initiatives and future needs in the training field and provides a framework for channelling offers of assistance |
| --- | --- |

—

acts as a clearing house to provide the Community, its Member States and the non-Member States concerned information on current initiatives and future needs in the training field and provides a framework for channelling offers of assistance

1. Governing Board

| — | one representative of each Member State, |
| --- | --- |

—

one representative of each Member State,

| — | three representatives of the Commission, |
| --- | --- |

—

three representatives of the Commission,

| — | chaired by the Commission. |
| --- | --- |

—

chaired by the Commission.

2. Director

| — | appointed by the Governing Board on a proposal from the Commission. |
| --- | --- |

—

appointed by the Governing Board on a proposal from the Commission.

3. Advisory Forum

| — | appointed by the Governing Board, |
| --- | --- |

—

appointed by the Governing Board,

| — | two experts from each Member State, |
| --- | --- |

—

two experts from each Member State,

| — | two experts from each eligible country, |
| --- | --- |

—

two experts from each eligible country,

| — | two experts from the social partners at European level. |
| --- | --- |

—

two experts from the social partners at European level.

4. External audit

Court of Auditors.

5. Internal audit

Commission's internal audit department.

6. Discharge

European Parliament on a recommendation from the Council.

Final budget for 2005

26,3 (18,5) million euro divided up into 18,5 (17,6) million euro funded by a Commission subsidy and 7,45 (0,9) million euro funded by other bodies as assigned revenue.

Staff numbers as at 31 December 2005

| — | 104 (104) posts in the establishment plan, of which 97 (99) posts occupied, |
| --- | --- |

—

104 (104) posts in the establishment plan, of which 97 (99) posts occupied,

| — | 22 (17) other staff (auxiliaries, local staff, contract staff) employed to carry out the tasks of temporary staff being recruited or cope with exceptional workloads. |
| --- | --- |

—

22 (17) other staff (auxiliaries, local staff, contract staff) employed to carry out the tasks of temporary staff being recruited or cope with exceptional workloads.

| — | Total staff: 119 (116) assigned to the following duties:






  — | operational tasks: 68 (67), |
| --- | --- | --- |

—

Total staff: 119 (116) assigned to the following duties:

—

operational tasks: 68 (67),

| — | administrative tasks: 33 (32), |
| --- | --- |

—

administrative tasks: 33 (32),

| — | mixed tasks: 18 (17). |
| --- | --- |

—

mixed tasks: 18 (17).

Activities

The assistance supplied by the Foundation covers a large range of technical fields including: initial vocational training, lifelong learning, continuing (adult) education, human resource development in companies, employment policies, training of unemployed people, poverty alleviation and social inclusion and training to encourage local development.

Support for the commission:

In 2005, 127 new requests for support were received from the Commission. The majority came from the delegations (35 %), followed by AIDCO (21 %), DG EAC (16 %), DG ELARG (9 %) and DG RELEX (7 %). This included 18 analyses of the situation in the ENPI countries. The Commission's rate of satisfaction with the ETF's response was 97 %.

The most frequent applications were those in the field of programming, followed by policies and contributions in the preparation of European Neighbourhood Instruments, the identification of projects and follow-up.

Information and analysis:

Country sector studies, statistics on education, policy advice to countries.

Innovation and development support projects. As a centre of expertise, the ETF contributes towards the setting up of development projects in order to test innovatory approaches allowing partner countries to carry out reforms of their education and vocational training systems.

Technical assistance to DG EAC for the implementation of the Tempus programme.

Assistance Conventions with CARDS, MEDA and Tacis for the Tempus programme: this assistance covers the whole cycle of the project. It includes the selection, management and follow-up of contracts and information and communication, including general administrative support. IT tools such as online applications and report forms have greatly facilitated the administrative management of the various project cycles.

Source: Information provided by the Foundation.

EUROPEAN TRAINING FOUNDATION

Source: Information supplied by the Foundation — These tables summarise the data provided by the Foundation in its annual accounts.

Table 2

Budgetary implementation for the financial year 2005

| (1000 euro) |
| --- |
| Revenue | Expenditure |
| Origin of Revenue | Revenue entered in the final budget for the financial year | Revenue collected | Allocation of expenditure | Appropriations under the final budget | Appropriations carried over from the previous financial year | Appropriations for the financial year and the previous financial year |
| entered | committed | paid | carried over | cancelled | available | paid | carried over | cancelled | available | committed | paid | carried over | cancelled |
| Community subsidies | 18 500 | 18 500 | Title I
  Staff | 11 942 | 11 787 | 11 310 | 478 | 154 | 123 | 110 | 0 | 13 | 12 065 | 11 910 | 11 420 | 478 | 167 |
| Own resources | 759 | 0 | Title II
  Administration | 1 568 | 1 559 | 1 232 | 326 | 10 | 247 | 227 | 0 | 20 | 1 815 | 1 806 | 1 459 | 326 | 30 |
| Other revenue | 0 | 34 | Title III
  Operating activities | 4 990 | 4 744 | 2 818 | 1 925 | 247 | 1 168 | 813 | 0 | 355 | 6 158 | 5 912 | 3 631 | 1 925 | 602 |
| Italian authorities — earmarked revenue | 1 131 | 479 | Title IV
  Italian Ministry | 479 | 357 | 123 | 356 | 0 | 651 | 342 | 309 | 0 | 1 130 | 1 008 | 465 | 665 | 0 |
| MEDA-ETE — earmarked revenue | 5 000 | 2 500 | Title V
  MEDA-ETE Conventions | 5 000 | 2 604 | 135 | 4 865 | 0 | 0 | 0 | 0 | 0 | 5 000 | 2 604 | 135 | 4 865 | 0 |
| TEMPUS — earmarked revenue | 1 323 | 1 739 | Title VI
  TEMPUS Conventions | 2 363 | 1 327 | 677 | 1 686 | 0 | 0 | 0 | 0 | 0 | 2 363 | 1 327 | 677 | 1 686 | 0 |
| Total | 26 713 | 23 252 | Total | 26 342 | 22 378 | 16 295 | 9 636 | 411 | 2 189 | 1 492 | 309 | 388 | 28 531 | 24 567 | 17 787 | 9 945 | 799 |

(1000 euro)

Revenue

Expenditure

Origin of Revenue

Revenue entered in the final budget for the financial year

Revenue collected

Allocation of expenditure

Appropriations under the final budget

Appropriations carried over from the previous financial year

Appropriations for the financial year and the previous financial year

entered

committed

paid

carried over

cancelled

available

paid

carried over

cancelled

available

committed

paid

carried over

cancelled

Community subsidies

18 500

18 500

Title I

Staff

11 942

11 787

11 310

478

154

123

110

0

13

12 065

11 910

11 420

478

167

Own resources

759

0

Title II

Administration

1 568

1 559

1 232

326

10

247

227

0

20

1 815

1 806

1 459

326

30

Other revenue

0

34

Title III

Operating activities

4 990

4 744

2 818

1 925

247

1 168

813

0

355

6 158

5 912

3 631

1 925

602

Italian authorities — earmarked revenue

1 131

479

Title IV

Italian Ministry

479

357

123

356

0

651

342

309

0

1 130

1 008

465

665

0

MEDA-ETE — earmarked revenue

5 000

2 500

Title V

MEDA-ETE Conventions

5 000

2 604

135

4 865

0

0

0

0

0

5 000

2 604

135

4 865

0

TEMPUS — earmarked revenue

1 323

1 739

Title VI

TEMPUS Conventions

2 363

1 327

677

1 686

0

0

0

0

0

2 363

1 327

677

1 686

0

Total

26 713

23 252

Total

26 342

22 378

16 295

9 636

411

2 189

1 492

309

388

28 531

24 567

17 787

9 945

799

Table 3

Economic outturn account for the financial year 2005 (1)

| (1000 euro) |
| --- |
| | 2005 |
| Operating revenue |
| Community subsidies | 18 484 |
| Other subsidies/revenue | 7 842 |
| Total (a) | 26 326 |
| Operating expenditure |
| Staff | 11 785 |
| Administration | 2 091 |
| Operations | 12 237 |
| Total (b) | 26 113 |
| Outturn on operations (c = a – b) | 213 |

(1000 euro)

2005

Operating revenue

Community subsidies

18 484

Other subsidies/revenue

7 842

Total (a)

26 326

Operating expenditure

Staff

11 785

Administration

2 091

Operations

12 237

Total (b)

26 113

Outturn on operations (c = a – b)

213

Table 4

Balance sheet at 31 December 2005 and 2004 (2)

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Assets |
| Fixed assets | 3 426 | 3 630 |
| Stocks | 37 | 76 |
| Receivables | 1 440 | 1 697 |
| Cash | 23 665 | 23 170 |
| Total | 28 568 | 28 573 |
| Liabilities |
| Accumulated surplus/deficit | 3 458 | 3 458 |
| Economic result for the year | 213 | |
| Long term liabilities | 205 | 205 |
| Current liabilities | 24 692 | 24 910 |
| Total | 28 568 | 28 573 |

(1000 euro)

2005

2004

Assets

Fixed assets

3 426

3 630

Stocks

37

76

Receivables

1 440

1 697

Cash

23 665

23 170

Total

28 568

28 573

Liabilities

Accumulated surplus/deficit

3 458

3 458

Economic result for the year

213

Long term liabilities

205

205

Current liabilities

24 692

24 910

Total

28 568

28 573

---

(1)  The data for the financial year 2004 are not shown because they are not comparable with those for 2005 due to a change in accounting methods.

(2)  The data for 2004 have been adapted to make them comparable to those for the financial year 2005.

---

THE AGENCY'S REPLIES

| 7. | Most of the amount carried forward (i.e. 83 %) is related to commitments corresponding to activities completed in 2005 for which requests for payments have not been received in due time. As far as the Tempus and the MEDA activities are concerned, the rate on carry over is adversely affected since the corresponding conventions are not annual and do not coincide with the financial year. |
| --- | --- |

7.

Most of the amount carried forward (i.e. 83 %) is related to commitments corresponding to activities completed in 2005 for which requests for payments have not been received in due time. As far as the Tempus and the MEDA activities are concerned, the rate on carry over is adversely affected since the corresponding conventions are not annual and do not coincide with the financial year.

| 8. | Following preceding Court's remarks, the 2006 budget has been published in the Official Journal of the European Union (OJ L 67, 8.3.2006) in full detail including the establishment plan. ETF intends to review, within the regulatory requirements, its budget structure at the occasion of the 2007 budget procedure to address some of the identified weaknesses. |
| --- | --- |

8.

Following preceding Court's remarks, the 2006 budget has been published in the Official Journal of the European Union (OJ L 67, 8.3.2006) in full detail including the establishment plan. ETF intends to review, within the regulatory requirements, its budget structure at the occasion of the 2007 budget procedure to address some of the identified weaknesses.

| 9. | For the future, ETF will take appropriate measures to remedy to the situation described by the Court. |
| --- | --- |

9.

For the future, ETF will take appropriate measures to remedy to the situation described by the Court.

| 10. | ETF is aware that the Accounting Officer needs to validate the accounts information and inventory systems. In the meantime, ETF accounting officer will work on the validation of systems on the basis of the methodology used in the Commission. |
| --- | --- |

10.

ETF is aware that the Accounting Officer needs to validate the accounts information and inventory systems. In the meantime, ETF accounting officer will work on the validation of systems on the basis of the methodology used in the Commission.

| 11. | Since 2004, ETF has introduced a comprehensive format for the selection board reports which makes information such as individual notes taken by individual panel members — redundant. ETF will study the possibility to give more information on the selection phase. |
| --- | --- |

11.

Since 2004, ETF has introduced a comprehensive format for the selection board reports which makes information such as individual notes taken by individual panel members — redundant. ETF will study the possibility to give more information on the selection phase.

---