REPORT on the financial statements of the Community Plant Variety Office (CPVO-Angers) (Financial years 1995 and 1996), together with the office's replies (97/C 393/09)

1.1. This report is addressed to the Administrative Council of the Community Plant Variety Office in accordance with Article 111 (2) of Council Regulation (EC) No 2100/94, of 27 July 1994 (1).

1.2. The Court has examined the financial statements of the Community Plant Variety Office for the financial years 1995 and 1996. In accordance with Article 110 of Regulation (EC) No 2100/94 (2), the budget was implemented under the responsibility of the President of the Office. This included the drawing up and presentation of the accounts (3) in accordance with the Office's financial provisions, as laid down in Article 112 of Regulation (EC) No 2100/94. Article 188c of the Treaty establishing the European Community requires the Court of Auditors to examine these accounts and this report constitutes its first audit of the Office.

1.3. The Court carried out its audit in accordance with generally accepted auditing standards in so far as these apply in the Community context. It carried out tests on the account books and records and on such other audit procedures as it considered necessary in this connection. The main observations arising from the Court's audit are set out in the second part of this report.

1.4. The financial statements for the financial years 1995 and 1996 were reliable and, overall, the legality and regularity of the underlying transactions were guaranteed.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE PLANT VARIETY OFFICE FOR THE FINANCIAL YEARS 1995 AND 1996

No suitable computer tool available

1.5. The various computer applications used for the management of the Office were purchased without an overall analysis of its present and future needs. As a result there was no link between the various types of software used, including the general accounts software, and that used for the budgetary accounts. This means that a lot of work has to be put into 're-inputting` data, thus reducing the efficiency of the Office's management.

1.6. The system used for the budgetary accounts does not guarantee their 'inviolability` because it allows changes to be made ex post.

The Financial Controller

1.7. Article 111 of the Office's Basic Regulation states that it must appoint a Financial Controller. To date, financial control has been carried out by the Commission's DG XX although it has never been formally appointed to do so.

No ACPC

1.8. Article 63 of the Financial Regulation applicable to the general budget of the European Communities states that: 'Contracts involving sums exceeding an amount specified in the implementing rules (...) shall be submitted for the opinion of an advisory committee on procurements and contracts`. The office has yet to set up such a committee.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 15 and 16 October 1997.

For the Court of Auditors

Bernhard FRIEDMANN

President

(1) OJ L 227, 1. 9. 1994, p. 27.

(2) In accordance with Article 111 (2) of Council Regulation No 2100/94, the accounts of all the revenue and expenditure of the Office for the financial year 1996 were drawn up on 20 March 1997, the date on which the accounts were signed by the President of the Office and sent to the Commission, the Management Board and the Court of Auditors. These accounts were received by the Court on 4 April 1997. The tables attached to this report show an abridged version of these financial statements.

ANNEX

TABLE 1 BALANCE SHEET FOR THE 1995 AND 1996 FINANCIAL YEARS

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NB: A recovery order for ECU 300 000, issued by the Commission at the end of 1996 and corresponding to the subsidy paid to the Office when it started work in 1995, could not be included in the accounts for the financial year just closed. The corresponding debt to the Commission is not therefore shown in the balance sheet.

Source: Prepared by the Court on the basis of the Office's data.

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(1) This amount corresponds to the fixed assets.

REPLIES OF THE COMMUNITY PLANT VARIETY OFFICE

The main points raised by the Court in this document on the execution of the budget for these years relate to the absence of:

- effective IT for general and budgetary accounting,

- a formal Financial Controller,

- a Consultative Committee on Procurement and Contracts.

The Office has the following comments in relation to these observations.

1. The lack of effective accounting IT

The general accounting system of the Office was established during its start-up phase with the help of 'Expert M` software (cobol), and the budgetary system is based on a programme developed by the IT team of the European Training Foundation in Turin (Excel). No interface between these systems had been developed owing to the intention of the Community agencies to develop an integrated and harmonized budgetary and accounting system.

In fact, keen to improve the quality and security of its budgetary and accounting system, as well as to facilitate communication with the relevant financial authorities, the Office (like most other agencies) participated in 1995, 1996 and 1997 in joint research into an integrated and harmonized system (joint invitation to tender appearing in 1995 OJ C 342, p.16; joint scrutiny of bids; statement of no acceptable offer; joint pursuit of new research into the SI2, Oracle, SAP, etc. systems; follow up of recent developments etc.). This research is ongoing.

Faced with this situation, the Office has sought real solutions at an internal level; an analysis of the real IT needs of the Office by an independent consultant; the temporary engagement of an IT officer with a view to improving the quality of the transitional system (network, security, development of links between the accounting and technical systems of the Office, improvement in the accountancy field), the creation of an IT working group within the Office and the publication of a recruitment notice for a full-time IT post within the Office.

2. Financial Controller

Article 111 of Council Regulation (EC) No 2100/94 refers to 'the Financial Controller appointed by the Administrative Council of the Office`. The budgets adopted by the Administrative Council of the Office for the years 1995, 1996 and 1997 have always provided for the post of a Financial Controller. Until now, in view of the size of the Office, and the discussions which have taken place on this subject in the Commission and the European Parliament, no internal Financial Controller has been nominated by the Administrative Council. However, during this period, DG XX of the Commission has assumed and exercised financial control of the Office in accordance with an informal agreement.

3. Absence of an ACPC

3.1. In 1996, an Advisory Committee on Procurement and Contracts (ACPC) had not yet been set up within the Office.

The latter is envisaged in the draft Financial Regulation of the Office, currently before the Court of Auditors for comment in accordance with Article 112 of Council Regulation (EC) No 2100/94.

However, it should be noted that a provisional ACPC has now (1997) been established within the Office.

3.2. For 1995, it should be remembered that:

(a) the President of the Office had not yet been appointed by the Administrative Council and the President of the Council had to stand in as 'mandataire`,

(b) no relevant purchase or tendering exercise exceeded the threshhold set under the Financial Regulation of the Commission.

3.3. For 1996, it should be remembered that:

(a) the President only came into office on 1 August 1996, the 'mandataire` having exercised the powers of the President up until 31 July 1996,

(b) no purchase or tendering exercise exceeded the threshhold set under the Financial Regulation of the Commission.

In conclusion, the absence of an ACPC has had no negative repurcussions on the financial front as regards the sound financial management of the Office. Furthermore, for every important financial outlay, the advance joint approval of the President of the Office and the President of the Administrative Council has always been obtained.