# C_2006312EN.01009301.xml

| 19.12.2006 | EN | Official Journal of the European Union | C 312/93 |
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19.12.2006

EN

Official Journal of the European Union

C 312/93

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REPORT

REPORT

on the annual accounts of the European Monitoring Centre on Racism and Xenophobia for the financial year 2005 together with the Centre's replies

(2006/C 312/16)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

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

| 7-12 | OBSERVATIONS |
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7-12

Tables 1 to 4

The Centre's replies

The Centre's replies

INTRODUCTION

| 1. | The European Monitoring Centre on Racism and Xenophobia (hereinafter the Centre) was established by Council Regulation (EC) No 1035/97 of 2 June 1997 (1). The Centre's primary tasks are to provide the Union and the Member States with reliable information on racism, xenophobia and anti-Semitism in the Union and to cooperate with the Council of Europe in these areas. |
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1.

The European Monitoring Centre on Racism and Xenophobia (hereinafter the Centre) was established by Council Regulation (EC) No 1035/97 of 2 June 1997 (1). The Centre's primary tasks are to provide the Union and the Member States with reliable information on racism, xenophobia and anti-Semitism in the Union and to cooperate with the Council of Europe in these areas.

1

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

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

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

| 3. | This Statement 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 Centre's accounts, as required by Article 248 of the Treaty establishing the European Community. |
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3.

This Statement 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 Centre's accounts, as required by Article 248 of the Treaty establishing the European Community.

2

| 4. | The Centre's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Director, pursuant to Article 12 of Regulation (EC) No 1035/97, and sent to the Court, which is required to provide a statement of assurance on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Centre's accounts for the financial year ended 31 December 2005 (3) were drawn up by its Director, pursuant to Article 12 of Regulation (EC) No 1035/97, and sent to the Court, which is required to provide a statement of assurance on their reliability and on the legality and regularity of the underlying transactions.

3

| 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 Centre'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 Centre'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 Centre'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 Centre'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 rate of commitment for the appropriations for the financial year 2005 was over 90 %, it was found that more than 50 % of the commitments for administrative expenditure were carried over and that in general there was a high rate of cancellation of the appropriations carried over (between 15 % and 25 %, depending on the title). This situation shows that there is still a need for the Centre to improve its expenditure planning and the way it monitors the implementation of this expenditure. Transfers between budget headings need to be justified and documented in accordance with the provisions in force. |
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7.

Although the rate of commitment for the appropriations for the financial year 2005 was over 90 %, it was found that more than 50 % of the commitments for administrative expenditure were carried over and that in general there was a high rate of cancellation of the appropriations carried over (between 15 % and 25 %, depending on the title). This situation shows that there is still a need for the Centre to improve its expenditure planning and the way it monitors the implementation of this expenditure. Transfers between budget headings need to be justified and documented in accordance with the provisions in force.

| 8. | The Court noted that no activity-based management had been brought in, despite the Centre's financial regulation making provision for its introduction, on the lines of that applied to the general budget, with a view to improving the monitoring of performance. In this context, achieving the Centre's aims should not mean merely carrying out a series of tasks. It should rather be seen as contributing to the goals laid down in its basic Regulation. The Centre's work programme should, in principle, express this contribution in operational and measurable terms. |
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8.

The Court noted that no activity-based management had been brought in, despite the Centre's financial regulation making provision for its introduction, on the lines of that applied to the general budget, with a view to improving the monitoring of performance. In this context, achieving the Centre's aims should not mean merely carrying out a series of tasks. It should rather be seen as contributing to the goals laid down in its basic Regulation. The Centre's work programme should, in principle, express this contribution in operational and measurable terms.

| 9. | The Centre had no system for planning and managing its equipment acquisitions. Furthermore, it did not make any cyclical checks on its inventory, although this would have improved the inventory's reliability. |
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9.

The Centre had no system for planning and managing its equipment acquisitions. Furthermore, it did not make any cyclical checks on its inventory, although this would have improved the inventory's reliability.

| 10. | The Centre's internal control system suffered from various shortcomings. The financial circuits set up by the authorising officer had not been described. The systems whereby the authorising officer and his delegatees supplied information to the accounting officer had in particular not been validated by the latter. The principle of the segregation of duties was not applied strictly, especially between the duties of initiation and verification. Furthermore, for commitments the lists of ex ante verifications should include sound financial management criteria. |
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10.

The Centre's internal control system suffered from various shortcomings. The financial circuits set up by the authorising officer had not been described. The systems whereby the authorising officer and his delegatees supplied information to the accounting officer had in particular not been validated by the latter. The principle of the segregation of duties was not applied strictly, especially between the duties of initiation and verification. Furthermore, for commitments the lists of ex ante verifications should include sound financial management criteria.

ex ante

| 11. | The rule whereby members of the selection boards must always be of a grade equivalent to or higher than that of the post to be filled was not always complied with. |
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11.

The rule whereby members of the selection boards must always be of a grade equivalent to or higher than that of the post to be filled was not always complied with.

| 12. | The invitations to tender issued by the Centre do not offer much by way of explanation as regards the minimum quality of bids and the weighting of price factors. As a result of this situation, an adequate level of transparency cannot be guaranteed and risks are entailed as regards the quality of the products and services to be provided. Barring a specific reason to the contrary, the price-quality ratio method should be used as it ensures that the goods and services to be purchased are of the highest possible quality. |
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12.

The invitations to tender issued by the Centre do not offer much by way of explanation as regards the minimum quality of bids and the weighting of price factors. As a result of this situation, an adequate level of transparency cannot be guaranteed and risks are entailed as regards the quality of the products and services to be provided. Barring a specific reason to the contrary, the price-quality ratio method should be used as it ensures that the goods and services to be purchased are of the highest possible quality.

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 151, 10.6.1997, p. 6.

1

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

2

(3)  These accounts were drawn up on 3 May 2006 and received by the Court on 29 June 2006.

3

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Table 1

European Monitoring Centre on Racism and Xenophobia (Vienna)

| Areas of Community competence deriving from the Treaty | Competences of the Centre as specified in the Council Regulation
  (Council Regulation (EC) No 1035/97 of 2 June 1997) | Governance | Resources made available to the Centre (2004) | Products and services supplied |
| --- | --- | --- | --- | --- |
| Collection of information

  The Commission may, within the limits and under conditions laid down by the Council in accordance with the provisions of this Treaty, collect any information and carry out any checks required for the performance of the tasks entrusted to it.

  (Article 284) | Objectives:







  — | to provide the Community and its Member States with objective, reliable and comparable data at European level on the phenomena of racism, xenophobia and anti-Semitism, |

Areas of Community competence deriving from the Treaty

Competences of the Centre as specified in the Council Regulation

(Council Regulation (EC) No 1035/97 of 2 June 1997)

Governance

Resources made available to the Centre (2004)

Products and services supplied

Collection of information

The Commission may, within the limits and under conditions laid down by the Council in accordance with the provisions of this Treaty, collect any information and carry out any checks required for the performance of the tasks entrusted to it.

(Article 284)

Objectives:

—

to provide the Community and its Member States with objective, reliable and comparable data at European level on the phenomena of racism, xenophobia and anti-Semitism,

| — | close cooperation with the Council of Europe in order to avoid duplication and obtain added value. |
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—

close cooperation with the Council of Europe in order to avoid duplication and obtain added value.

Tasks:

| — | to study the extent and development of the phenomena of racism and xenophobia, |
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—

to study the extent and development of the phenomena of racism and xenophobia,

| — | to collect and analyse information, via the European Racism and Xenophobia Information Network (RAXEN), |
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—

to collect and analyse information, via the European Racism and Xenophobia Information Network (RAXEN),

| — | to carry out scientific surveys, |
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—

to carry out scientific surveys,

| — | to encourage widespread dissemination of such information, |
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—

to encourage widespread dissemination of such information,

| — | to formulate opinions for the Community and its Member States, |
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—

to formulate opinions for the Community and its Member States,

| — | to develop indicators and criteria to improve the comparability of data, |
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—

to develop indicators and criteria to improve the comparability of data,

| — | to publish an annual report on the situation regarding racism and xenophobia. |
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—

to publish an annual report on the situation regarding racism and xenophobia.

1. Management Board

Composition:

one independent person appointed by each Member State, one independent person appointed by the European Parliament, one independent person appointed by the Council of Europe and a representative of the Commission.

Duties:

to adopt the work programme and the general annual report. To adopt the final budget and the establishment plan. To give an opinion on the final accounts.

2. Executive Board

Composition:

| — | Chairman of the Management Board, |
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—

Chairman of the Management Board,

| — | one representative of the Council of Europe, |
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—

one representative of the Council of Europe,

| — | one representative of the Commission, |
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—

one representative of the Commission,

| — | two other members of the Management Board. |
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—

two other members of the Management Board.

3. Director

Appointed by the Management Board on a proposal from the Commission.

4. External audit

European Court of Auditors.

5. Internal control

The Commission's Internal Audit Service.

6. Discharge authority

Parliament on a recommendation from the Council.

2005 final budget:

8,279 million euro (7,9 million euro) including Community contribution: 100 % (98,7 %).

Staff numbers at 31 December 2005:

37 (34) posts in the establishment plan,

posts occupied: 35 (30)

+4 (4) other staff (auxiliary contracts, seconded national experts, local and employment-agency staff)

Total staff: 41 (34)

assigned to the following duties:

operational: 24 (21)

administrative: 13 (8)

mixed: 4 (5).

RAXEN:

Number of contributions through the 25 national focal points: 400

Number of meetings: 5

RESEARCH REPORTS:

Number of reports: 13

Number of meetings: 7

Annual Reports: 2

EUMC Newsletter: 5

Equal Voices: 2

COOPERATION WITH THE MEMBER STATES AND THE OTHER INSTITUTIONS (number of events organised jointly):

| — | Member States: 4 |
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—

Member States: 4

| — | Commission: 14 |
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—

Commission: 14

| — | European Parliament: 8 |
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—

European Parliament: 8

| — | COR: 3 |
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—

COR: 3

| — | EESC: 3 |
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—

EESC: 3

| — | Council of Europe: 10 |
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—

Council of Europe: 10

| — | OSCE: 3 |
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—

OSCE: 3

| — | UN: 3 |
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—

UN: 3

| — | Inter-agency: 3 |
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—

Inter-agency: 3

| — | NRT: 6 |
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—

NRT: 6

| — | ERT: 1 |
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—

ERT: 1

Source: Information supplied by the Centre.

EUROPEAN MONITORING CENTRE ON RACISM AND XENOPHOBIA

Source: Data supplied by the Centre. These tables summarise the data supplied by the Centre in its annual accounts.

Table 2

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 for the financial year | Appropriations carried over from the previous financial year | Available appropriations
  (appropriations for the financial year and for the previous financial year) |
| final | committed | paid | carried over | cancelled | outstanding commitments | paid | cancelled | appropriations | committed | paid | carried over | cancelled |
| Community subsidies (1) | 8 189 | 8 189 | Title I
  Staff | 3 152 | 3 078 | 3 008 | 70 | 74 | 85 | 71 | 14 | 3 237 | 3 163 | 3 079 | 70 | 88 |
| Allocated revenue (Phare) | 90 | 90 | Title II
  Administration | 1 222 | 1 132 | 551 | 581 | 91 | 37 | 30 | 7 | 1 259 | 1 169 | 581 | 581 | 98 |
| Other revenue | 0 | 151 | Title III
  Operating activities | 3 815 | 3 398 | 2 731 | 667 | 416 | 745 | 556 | 189 | 4 560 | 4 143 | 3 287 | 667 | 605 |
| | | | Allocated revenue (Phare and other) | 90 | 0 | 0 | 90 | 0 | 0 | 0 | 0 | 90 | 0 | 0 | 90 | 0 |
| Total | 8 279 | 8 430 | Total | 8 279 | 7 608 | 6 290 | 1 408 | 581 | 867 | 657 | 210 | 9 146 | 8 475 | 6 947 | 1 408 | 791 |

(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 for the financial year

Appropriations carried over from the previous financial year

Available appropriations

(appropriations for the financial year and for the previous financial year)

final

committed

paid

carried over

cancelled

outstanding commitments

paid

cancelled

appropriations

committed

paid

carried over

cancelled

Community subsidies (1)

8 189

8 189

Title I

Staff

3 152

3 078

3 008

70

74

85

71

14

3 237

3 163

3 079

70

88

Allocated revenue (Phare)

90

90

Title II

Administration

1 222

1 132

551

581

91

37

30

7

1 259

1 169

581

581

98

Other revenue

0

151

Title III

Operating activities

3 815

3 398

2 731

667

416

745

556

189

4 560

4 143

3 287

667

605

Allocated revenue (Phare and other)

90

0

0

90

0

0

0

0

90

0

0

90

0

Total

8 279

8 430

Total

8 279

7 608

6 290

1 408

581

867

657

210

9 146

8 475

6 947

1 408

791

Table 3

Revenue and expenditure account for the financial year 2005 (2)

| (1000 euro) |
| --- |
| | 2005 |
| Operating revenue |
| Community subsidies | 7 466 |
| Other subsidies/revenue | 14 |
| Total (a) | 7 480 |
| Operating expenditure |
| Staff | 2 729 |
| Administration | 1 029 |
| Operating activities | 3 304 |
| Total (b) | 7 062 |
| Economic result (c = a – b) | 418 |

(1000 euro)

2005

Operating revenue

Community subsidies

7 466

Other subsidies/revenue

14

Total (a)

7 480

Operating expenditure

Staff

2 729

Administration

1 029

Operating activities

3 304

Total (b)

7 062

Economic result (c = a – b)

418

Table 4

Balance sheet at 31 December 2005 and 2004 (3)

| (1000 euro) |
| --- |
| | 2005 | 2004 |
| Assets |
| Fixed assets | 152 | 123 |
| Receivables | 361 | 366 |
| Cash and cash equivalents | 2 832 | 1 279 |
| Total | 3 345 | 1 768 |
| Liabilities |
| Cumulative results for previous years | 725 | 725 |
| Result for the year | 418 | 0 |
| Current liabilities | 2 202 | 1 043 |
| Total | 3 345 | 1 768 |

(1000 euro)

2005

2004

Assets

Fixed assets

152

123

Receivables

361

366

Cash and cash equivalents

2 832

1 279

Total

3 345

1 768

Liabilities

Cumulative results for previous years

725

725

Result for the year

418

0

Current liabilities

2 202

1 043

Total

3 345

1 768

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(1)  Including subsidies on behalf of the European Economic Area.

(2)  The data for the financial year 2004 are not shown as they are not comparable with those for 2005 because of a change in the accounting methods used.

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

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THE CENTRE'S REPLIES

| 7. | The high rate of the administrative appropriations carried forward is due to the fact that the Procurement Section was created late in 2005. Tenders were launched after this, in order to ensure the legality of the procedures. A procedure has been put in place to decrease the level of cancelled carry-overs. Future budgetary transfers will be fully documented. |
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7.

The high rate of the administrative appropriations carried forward is due to the fact that the Procurement Section was created late in 2005. Tenders were launched after this, in order to ensure the legality of the procedures. A procedure has been put in place to decrease the level of cancelled carry-overs. Future budgetary transfers will be fully documented.

| 8. | The Annual Work Programme 2006 has been prepared in a format which meets the needs of Article 40 of the Framework FR, setting the key activities, objectives, tasks, output, performance indicators, and outcome/impact of the work of the Centre. Consequently, the Annual Activity Report for year 2006 will be drawn corresponding to the structure of the Work Programme thus providing the required performance indicators and performance review based on quantifiable data. |
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8.

The Annual Work Programme 2006 has been prepared in a format which meets the needs of Article 40 of the Framework FR, setting the key activities, objectives, tasks, output, performance indicators, and outcome/impact of the work of the Centre. Consequently, the Annual Activity Report for year 2006 will be drawn corresponding to the structure of the Work Programme thus providing the required performance indicators and performance review based on quantifiable data.

| 9. | An inventory management application has been procured and is currently configured and installed. An inventory count is planned to be performed in the last quarter of the year, as soon as the application has been installed and the preparatory works have been finalised. |
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9.

An inventory management application has been procured and is currently configured and installed. An inventory count is planned to be performed in the last quarter of the year, as soon as the application has been installed and the preparatory works have been finalised.

| 10. | In February 2006, the financial workflows were changed to improve internal controls over transactions and adhere to the requirements of the FR. The abovementioned changes have been documented in a series of Instruction Notes signed by the Director, after consultation of the Accounting Officer and the Internal Auditor of the EUMC. The new workflows were tested in a test SI2 universe and the validation of the test is documented. |
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10.

In February 2006, the financial workflows were changed to improve internal controls over transactions and adhere to the requirements of the FR. The abovementioned changes have been documented in a series of Instruction Notes signed by the Director, after consultation of the Accounting Officer and the Internal Auditor of the EUMC. The new workflows were tested in a test SI2 universe and the validation of the test is documented.

| 11. | Whilst the EUMC's staffing table foresees a total of only 37 posts, it is very difficult and, in some cases impossible, to constitute boards with agents having at least the same grade of the position to be filled. |
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11.

Whilst the EUMC's staffing table foresees a total of only 37 posts, it is very difficult and, in some cases impossible, to constitute boards with agents having at least the same grade of the position to be filled.

| 12. | The Centre will consider improving the clarity of information provided in the call for tenders and shall apply the method of ‘price/quality’ ratio where it is deemed to be appropriate. |
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12.

The Centre will consider improving the clarity of information provided in the call for tenders and shall apply the method of ‘price/quality’ ratio where it is deemed to be appropriate.

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