Report

on the financial statements of the European Agency for Safety and Health at Work (EASH - Bilbao) for the financial year ended 31 December 1998, together with the Agency's replies

(1999/C 372/01)

CONTENTS

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The Court's opinion

1. This report is addressed to the Management Board of the European Agency for Safety and Health at Work in accordance with Article 14(4) of Council Regulation (EC) No 2062/94(1).

2. The Court has examined the financial statements of the European Agency for Safety and Health at Work for the financial year ended 31 December 1998. In accordance with Article 14(1) of Council Regulation (EC) No 2062/94, the budget was implemented under the responsibility of the Director. This responsibility included the drawing-up and presentation of the financial statements(2), in accordance with the internal financial provisions, as provided for in Article 15 of Council Regulation (EC) No 2062/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit these accounts.

3. The Court performed its audit in accordance with its auditing policies and standards. These have been adapted from generally accepted international auditing standards to reflect the specific characteristics of the Community context. The Court carried out such tests of the accounting records and other audit procedures as it deemed necessary in the circumstances. By means of this audit, the Court obtained a reasonable basis for the opinion expressed below.

4. This examination has enabled the Court to obtain reasonable assurance that the annual accounts for the financial year ended 31 December 1998 are reliable and that the underlying transactions, taken as a whole, are legal and regular.

Main observations on the implementation of the budget of the European Agency for Safety and Health at Work (EASH - Bilbao) for the financial year ended 31 December 1998

Financial statements and accounting

5. The Agency did not provide any supporting documents to substantiate a sum of ECU 5000 which appears in the liabilities section of the end-of-year balance sheet under the description "Sundry accounts due".

6. The Agency's accounts department should balance the accounts regularly and carry out the reconciliations and analyses of the various balances which the implementing provisions for its financial regulation provide for.

Implementation of the budget/Principle of annuality

7. Out of a total of ECU 1,05 million of appropriations automatically carried over from the financial year 1997, only ECU 0,65 million (62 %) was actually used. The remaining 38 % (ECU 0,4 million) was cancelled. The total amount of cancellations does not comply with the nature of automatic carry-overs, which ought to correspond to obligations to third parties remaining unfulfilled at the end of the financial year.

8. Commitments automatically carried over to the financial year 1999 (ECU 1,9 million) were examined, and in the case of some carry-overs it was not possible to confirm that they were justified. The Agency's practice concerning carry-overs of appropriations does not conform to the principle of annuality enshrined in its Financial Regulation.

VAT

9. The Agency has still not recovered the VAT paid during the financial years 1996 and 1997 (ECU 145000).

Calls for tender/Advisory Committee on Procurements and Contracts (ACPC)

10. The deadline for submitting tenders should be at least 40 days, to enable more tenders to be received. Calls for tender should lay down clearly defined criteria, which should be used as a basis for the ACPC's assessments.

Premises

11. The landlord has negotiated a bank guarantee to ensure that the Agency fulfils its obligations in relation to its tenancy agreement. In general, this type of guarantee is not needed for a European Union body. In order to prevent it being extended, it would be advisable to restart negotiations before it expires.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 7 October 1999.

For the Court of Auditors

Jan O. KARLSSON

President

(1) OJ L 216, 20.8.1994, p. 1.

(2) As required under Article 14(3) of Council Regulation (EC) No 2062/94, the accounts for all the Agency's revenue and expenditure for the financial year 1998 were drawn up on 25 March 1999 and forwarded to the Agency's Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 9 April 1999. A summarised version of these financial statements is presented in the tables attached to this report.

Table 1

Balance sheet as at 31 December 1998 and 1997

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Table 2

Revenue and expenditure accounts for the financial years 1998 and 1997

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REPLIES FROM THE EUROPEAN AGENCY FOR SAFETY AND HEALTH AT WORK

1. The Court of Auditors visited the European Agency for Safety and Health at Work from 14 to 18 December 1998 and from 3 to 7 May 1999 and carried out the audit for the financial year 1998.

2. In order to facilitate the work of the Court, the accounts and all relevant supporting documents were made available to the Court. The personnel files and the contracts concluded were also presented.

3. In its letter of 24 June 1999, the Court communicated to the Agency its observations that were likely to appear in its report on the financial statements of the Agency for the financial year ended 31 December 1998. The Court requested the Agency to submit its comments on these observations.

4. For this purpose, the Agency would like to comment on the following paragraphs.

Financial statements and accounting

5. Observation relating to third-party creditors

The balance of suppliers' accounts indicated by the Court of Auditors, i.e. ECU 5000 (3 % of the total for the suppliers' accounts) is constituted by a number of arrears which are difficult to identify due to the large number of movements on the suppliers' accounts. The Agency undertakes to provide, at the end of the financial year 1999, a breakdown by supplier of the "Sundry accounts due" entry in the balance sheet; this measure is included in the review of the progress achieved during the financial years 1998 and 1999.

6. Observation relating to monthly balances of accounts

Concerning monthly balances of accounts, the Agency fully supports the Court of Auditors' observation, which will be implemented through the establishment of procedures and appropriate measures during the financial year 1999.

Implementation of the budget/Principle of annuality

7. The cancellations relate to appropriations earmarked for measures which have been cancelled in full agreement with the contracting parties, for whom every obligation was met. Other cancellations concern appropriations committed to cover the last payment of the contracts with the focal points which had not been paid due to the delay in the implementation of the projects. These last payments will be covered by appropriations committed under the budget for 1999.

8. The Agency will endeavour in the future to no longer carry over appropriations under the conditions indicated by the Court.

VAT

9. The Agency, following the advice of the Spanish tax office, is in the process of launching procedures to recover VAT directly from suppliers. The first reimbursements are expected before the end of the year.

Calls for tender/Advisory Committee on Procurements and Contracts (ACPC)

10. The Agency will follow the Court's recommendations on this matter by setting deadlines for submitting tenders of at least 40 days to enable all tenders to be submitted to the ACPC for its opinion.

Premises

11. The tenancy agreement is subject to Spanish legislation and local customs, which make provision for the constitution of a bank guarantee. To follow up the Court's recommendation, the Agency will raise the subject of this tenancy requirement at the negotiations to renew the lease at the end of the year 2000.