# C_2005332EN.01011201.xml

| 28.12.2005 | EN | Official Journal of the European Union | C 332/112 |
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28.12.2005

EN

Official Journal of the European Union

C 332/112

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REPORT

REPORT

on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2004 together with the Office's replies

(2005/C 332/16)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | THE COURT'S OPINION |
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3-6

| 7-10 | OBSERVATIONS |
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7-10

Tables 1 to 4

The Office's replies

The Office's replies

INTRODUCTION

| 1. | The Office for Harmonization in the Internal Market (hereinafter called ‘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. The Office's duties and activities are summarised, on the basis of information submitted by the Office, in Table 1. |
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1.

The Office for Harmonization in the Internal Market (hereinafter called ‘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. The Office's duties and activities are summarised, on the basis of information submitted by the Office, in Table 1.

1

Table 1

| 2. | For information, the annual accounts drawn up by the Office for the financial year 2004 are summarised in Tables 2, 3 and 4. |
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2.

For information, the annual accounts drawn up by the Office for the financial year 2004 are summarised in Tables 2, 3 and 4.

Tables 2, 3 and 4

THE COURT'S OPINION

| 3. | This opinion 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 opinion 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 2004 (2) were drawn up by its President, pursuant to Article 119 of Regulation (EC) No 40/94, and sent to the Court, which is required to give its opinion 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 2004 (2) were drawn up by its President, pursuant to Article 119 of Regulation (EC) No 40/94, and sent to the Court, which is required to give its opinion on their reliability and on the legality and regularity of the underlying transactions.

2

| 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. |
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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. |
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6.

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

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2004, in all material respects, are 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 opinion into question.

Reliability of the accountsThe Office's accounts for the financial year ended 31 December 2004, in all material respects, are 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 opinion into question.

OBSERVATIONS

| 7. | The revenue received between 21 and 31 December 2004, i.e. 2,3 million euro, was entered in the accounts as revenue for the financial year 2005, in breach of the principle of the annual nature of the budget. |
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7.

The revenue received between 21 and 31 December 2004, i.e. 2,3 million euro, was entered in the accounts as revenue for the financial year 2005, in breach of the principle of the annual nature of the budget.

| 8. | In its 2003 Annual Report (3), the Court drew attention to the need for rigorous evaluation of appropriations to be carried over. The checks carried out for the financial year 2004 showed that a total of 515 000 euro was carried over unnecessarily, which also conflicts with the principle of the annual nature of the budget. |
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8.

In its 2003 Annual Report (3), the Court drew attention to the need for rigorous evaluation of appropriations to be carried over. The checks carried out for the financial year 2004 showed that a total of 515 000 euro was carried over unnecessarily, which also conflicts with the principle of the annual nature of the budget.

3

| 9. | The Office has not made provision in its 2004 balance sheet for two legal disputes, the potential financial impact of which cannot be considered negligible. |
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9.

The Office has not made provision in its 2004 balance sheet for two legal disputes, the potential financial impact of which cannot be considered negligible.

| 10. | There are still failings in the inventory system (4). The lists of assets entered in the accounts as fixed assets had not been reconciled with the inventories, and discrepancies were found. Beginning in 2004 the Office includes computer licences and software in its fixed assets. However, the corresponding fixed assets have been understated by some 550 000 euro as a result of the use of incorrect criteria for determining the value of the computer licences and software. |
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10.

There are still failings in the inventory system (4). The lists of assets entered in the accounts as fixed assets had not been reconciled with the inventories, and discrepancies were found. Beginning in 2004 the Office includes computer licences and software in its fixed assets. However, the corresponding fixed assets have been understated by some 550 000 euro as a result of the use of incorrect criteria for determining the value of the computer licences and software.

4

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 October 2005.

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 2005 and received by the Court on 29 June 2005.

2

(3)  Paragraph 7 of the Report concerning the financial year 2003 (OJ C 324, 30.12.2004, p. 107).

3

(4)  Paragraph 10 of the Report concerning the financial year 2003 (OJ C 324, 30.12.2004, p. 107).

4

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Table 1

Office for Harmonization in the Internal Market (Alicante)

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

  (2003 data) | Products and services supplied in 2004

  (2003 data) |
| --- | --- | --- | --- | --- |
| 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

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

Governance

Resources available to the Office

(2003 data)

Products and services supplied in 2004

(2003 data)

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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1.

Administrative Board

—

One representative of each Member State

| — | One representative of the Commission |
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—

One representative of the Commission

| — | 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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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 |
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3.

Budget Committee

—

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

| — | 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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4.

Decisions in connection with procedures

Decisions are taken by:

(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

  European Court of Auditors |
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5.

External audit

European Court of Auditors

| 6. | Discharge authority

  The Office's Budget Committee |
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6.

Discharge authority

The Office's Budget Committee

Final budget

190 million euro (157 million euro). Community contribution: 0 % (0 %)

Staff numbers as at 31 December 2004

Number of posts in establishment plan: 675 (675)

Posts occupied: 648 (650)

+ 41 (31) other staff (auxiliary contracts, seconded national experts, local employees and temporary replacements)

Total staff: 689 (681)

Assigned to the following duties:

| — | operational: 524 (423) |
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—

operational: 524 (423)

| — | administrative: 165 (245) |
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—

administrative: 165 (245)

| — | mixed: 0 (13) |
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—

mixed: 0 (13)

Trade marks

Number of applications: 59 592(57 637)

Number of registrations: 31 310(34 290)

Number of cases of oppositions: 10 773(9 929)

Number of cases settled: 9 172(9 396)

Appeals to the Boards of Appeal: 1 208(719)

Average time for registration (excluding opposition or appeal):

| — | before publication: 12 months (12 months) |
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—

before publication: 12 months (12 months)

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

between publication and registration: 6 months (6 months)

Designs

Designs received: 55 000(37 084)

Designs registered: 57 765(24 801)

Source: Information submitted by the Office.

Table 2

Office for Harmonization in the Internal Market — Implementation of the budget for the financial year 2004

| (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 available (2004 budget and financial year 2003) |
| entered | committed | paid | carried over | cancelled | commitments outstanding | paid | cancelled | appropriations | committed | paid | carried over | cancelled |
| Fees | 113 838 | 126 308 | Title I
  Staff | 58 174 | 55 100 | 53 665 | 1 001 | 3 508 | 1 169 | 793 | 375 | 59 343 | 56 269 | 54 458 | 1 001 | 3 884 |
| Other revenue | 3 933 | 4 347 | Title II
  Administration | 29 625 | 27 232 | 18 324 | 8 890 | 2 410 | 7 891 | 7 111 | 780 | 37 516 | 35 123 | 25 436 | 8 890 | 3 190 |
| Outturn for the previous financial year | 72 353 | 72 353 | Title III
  Operating activities | 40 870 | 32 795 | 16 455 | 16 323 | 8 092 | 9 262 | 8 589 | 673 | 50 132 | 42 057 | 25 044 | 16 323 | 8 765 |
| Title X
  Reserve | 61 455 | 0 | 0 | 0 | 61 455 | 0 | 0 | 0 | 61 455 | 0 | 0 | 0 | 61 455 |
| Total | 190 124 | 203 008 | Total | 190 124 | 115 127 | 88 444 | 26 214 | 75 465 | 18 322 | 16 493 | 1 828 | 208 446 | 133 449 | 104 938 | 26 214 | 77 293 |
| NB: Variations in totals are due to the effects of rounding.

  Source: Office data — This table summarises the data supplied by the Office in its annual accounts. |

(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 available (2004 budget and financial year 2003)

entered

committed

paid

carried over

cancelled

commitments outstanding

paid

cancelled

appropriations

committed

paid

carried over

cancelled

Fees

113 838

126 308

Title I

Staff

58 174

55 100

53 665

1 001

3 508

1 169

793

375

59 343

56 269

54 458

1 001

3 884

Other revenue

3 933

4 347

Title II

Administration

29 625

27 232

18 324

8 890

2 410

7 891

7 111

780

37 516

35 123

25 436

8 890

3 190

Outturn for the previous financial year

72 353

72 353

Title III

Operating activities

40 870

32 795

16 455

16 323

8 092

9 262

8 589

673

50 132

42 057

25 044

16 323

8 765

Title X

Reserve

61 455

0

0

0

61 455

0

0

0

61 455

0

0

0

61 455

Total

190 124

203 008

Total

190 124

115 127

88 444

26 214

75 465

18 322

16 493

1 828

208 446

133 449

104 938

26 214

77 293

NB: Variations in totals are due to the effects of rounding.

Source: Office data — This table summarises the data supplied by the Office in its annual accounts.

Table 3

Office for Harmonization in the Internal Market — Revenue and expenditure account for the financial years 2004 and 2003

| (1000 euro) |
| --- |
| | 2004 | 2003 |
| Revenue |
| Own revenue | 127 465 | 107 056 |
| Financial revenue | 3 190 | 3 460 |
| Total revenue (a) | 130 655 | 110 516 |
| Budgetary expenditure for the financial year |
| Staff — Title I of the budget |
| Payments | 53 665 | 47 416 |
| Appropriations carried over | 1 001 | 1 168 |
| Administration — Title II of the budget |
| Payments | 18 324 | 16 366 |
| Appropriations carried over | 8 890 | 7 891 |
| Operating activities — Title III of the budget |
| Payments | 16 455 | 14 137 |
| Appropriations carried over | 16 323 | 9 262 |
| Total expenditure (b) | 114 658 | 96 240 |
| Outturn for the financial year (a – b) | 15 997 | 14 276 |
| Other expenditure/provisions for the year |
| Provision for procedural expenditure | 1 398 | 1 094 |
| Subtotal | 1 398 | 1 094 |
| Balance carried over from the previous financial year | 72 353 | 55 368 |
| Appropriations carried over and cancelled | 1 828 | 1 506 |
| Sums for re-use from the previous financial year not used | 0 | 115 |
| Exchange-rate differences and extraordinary revenue | –7 | –6 |
| Balance for the financial year | 91 569 | 72 353 |
| NB: Variations in totals are due to the effects of rounding.

  Source: Office data — This table summarises the data supplied by the Office in its annual accounts. |

(1000 euro)

2004

2003

Revenue

Own revenue

127 465

107 056

Financial revenue

3 190

3 460

Total revenue (a)

130 655

110 516

Budgetary expenditure for the financial year

Staff — Title I of the budget

Payments

53 665

47 416

Appropriations carried over

1 001

1 168

Administration — Title II of the budget

Payments

18 324

16 366

Appropriations carried over

8 890

7 891

Operating activities — Title III of the budget

Payments

16 455

14 137

Appropriations carried over

16 323

9 262

Total expenditure (b)

114 658

96 240

Outturn for the financial year (a – b)

15 997

14 276

Other expenditure/provisions for the year

Provision for procedural expenditure

1 398

1 094

Subtotal

1 398

1 094

Balance carried over from the previous financial year

72 353

55 368

Appropriations carried over and cancelled

1 828

1 506

Sums for re-use from the previous financial year not used

0

115

Exchange-rate differences and extraordinary revenue

–7

–6

Balance for the financial year

91 569

72 353

NB: Variations in totals are due to the effects of rounding.

Source: Office data — This table summarises the data supplied by the Office in its annual accounts.

Table 4

Office for Harmonization in the Internal Market — Balance sheet at 31 December 2004 and 31 December 2003

| (1000 euro) |
| --- |
| Assets | 2004 | 2003 | Liabilities | 2004 | 2003 |
| Fixed assets | | | Fixed capital | | |
| Buildings | 27 915 | 26 747 | Own capital | 27 656 | 27 920 |
| Equipment and furniture | 3 800 | 3 828 | Balance for the financial year | 91 569 | 72 353 |
| Transport equipment | 97 | 115 | Subtotal | 119 225 | 100 273 |
| Computer equipment | 12 606 | 11 241 | Long-term debt | | |
| Intangible assets | 373 | 24 | Long-term creditors | 25 | 24 |
| Depreciation | –17 135 | –14 035 | Subtotal | 25 | 24 |
| Subtotal | 27 656 | 27 920 | Current liabilities | | |
| Current assets | | | Automatic carry-overs of appropriations | 26 214 | 18 322 |
| Suppliers and missions | 173 | 200 | Advances from clients | 26 582 | 29 395 |
| Sundry accounts receivable | 90 | 107 | Amount outstanding | 37 | 52 |
| Subtotal | 263 | 307 | Sundry accounts payable | 228 | 757 |
| Cash accounts | | | Provision for procedural expenditure | 12 246 | 13 644 |
| Banks | 156 406 | 134 239 | Subtotal | 65 307 | 62 170 |
| Cash | 232 | 1 | | | |
| Subtotal | 156 638 | 134 240 | | | |
| Total | 184 557 | 162 467 | Total | 184 557 | 162 467 |
| NB: Variations in totals are due to the effects of rounding.

  Source: Office data — This table summarises the data supplied by the Office in its annual accounts. |

(1000 euro)

Assets

2004

2003

Liabilities

2004

2003

Fixed assets

Fixed capital

Buildings

27 915

26 747

Own capital

27 656

27 920

Equipment and furniture

3 800

3 828

Balance for the financial year

91 569

72 353

Transport equipment

97

115

Subtotal

119 225

100 273

Computer equipment

12 606

11 241

Long-term debt

Intangible assets

373

24

Long-term creditors

25

24

Depreciation

–17 135

–14 035

Subtotal

25

24

Subtotal

27 656

27 920

Current liabilities

Current assets

Automatic carry-overs of appropriations

26 214

18 322

Suppliers and missions

173

200

Advances from clients

26 582

29 395

Sundry accounts receivable

90

107

Amount outstanding

37

52

Subtotal

263

307

Sundry accounts payable

228

757

Cash accounts

Provision for procedural expenditure

12 246

13 644

Banks

156 406

134 239

Subtotal

65 307

62 170

Cash

232

1

Subtotal

156 638

134 240

Total

184 557

162 467

Total

184 557

162 467

NB: Variations in totals are due to the effects of rounding.

Source: Office data — This table summarises the data supplied by the Office in its annual accounts.

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THE OFFICE'S REPLIES

| 7. | The problem highlighted by the Court was due to the constraints of the computer system used. The implementation of the new general accounting system should prevent this situation from recurring. |
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7.

The problem highlighted by the Court was due to the constraints of the computer system used. The implementation of the new general accounting system should prevent this situation from recurring.

| 8. | The Office will continue its efforts in this domain. To this end, for the close of the financial year 2005, measures have already been taken to improve the evaluation of any carry-overs required. |
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8.

The Office will continue its efforts in this domain. To this end, for the close of the financial year 2005, measures have already been taken to improve the evaluation of any carry-overs required.

| 9. | The Office takes note of the Court's observation. In one case, the Office believes that when the accounts were closed it was not in a position to assess the probability of having to pay compensation. |
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9.

The Office takes note of the Court's observation. In one case, the Office believes that when the accounts were closed it was not in a position to assess the probability of having to pay compensation.

| 10. | Since February 2005 a system integrating the inventory and the accounting systems has been in place. This has enabled the inventory and the fixed-assets accounts to be reconciled fully. Since 2005, the Office has been applying IPSAS standards for the valuation of computer licences and software. |
| --- | --- |

10.

Since February 2005 a system integrating the inventory and the accounting systems has been in place. This has enabled the inventory and the fixed-assets accounts to be reconciled fully. Since 2005, the Office has been applying IPSAS standards for the valuation of computer licences and software.

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