Report

on the financial statements of the Translation Centre for the bodies of the European Union (TCBEU - Luxembourg) for the financial year ended 31 December 1998, together with the Centre's replies

(1999/C 372/04)

CONTENTS

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The Court's opinion

1. This report is addressed to the Management Board of the Translation Centre for the bodies of the European Union in conformity with Article 14(4) of Council Regulation (EC) No 2965/94(1).

2. The Court has examined the financial statements of the Translation Centre for the bodies of the European Union for the financial year ended 31 December 1998. In accordance with Article 14(1) of Council Regulation (EC) No 2965/94, the budget was implemented at 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 Regulation (EC) No 2965/94. 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 audit 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 Translation Centre for the bodies of the European Union for the financial year ended 31 December 1998

Budget

5. It is recommended that the Centre should obtain from all the bodies concerned the information which it requires in order to improve the planning of the work to be carried out by the Centre, so that the allocations for the translation work to be entrusted by the various bodies and institutions to the TCBEU under the regulations or by virtue of contracts can be accurately identified. The main advantage of this would be to make it possible to carry out a reconciliation of the expenditure forecast of the client bodies with the corresponding revenue forecast of the TCBEU, and thus to correct certain discrepancies detected in 1998 and to draw up more realistic budgets in the future.

Cash position

6. Since the Centre has never provided its Management Board with the quarterly cash position forecasts laid down by its Financial Regulation, it has not been possible to establish whether the level of the TCBEU's cash account is appropriate in view of actual needs. However, the Court observes that covering the Centre's obligations in a prudent manner does not justify the large amount of cash available nor the fact that it has almost doubled (from ECU 5,9 million as at 31 December 1997 to ECU 10,7 million as at 31 December 1998).

Analytical accounts

7. In view of the considerable variations seen between the cost price of one page of translation, as set out in the draft budget estimates (ECU 76 per page) and as given by the data in the Centre's revenue and expenditure account for the financial year 1998 (ECU 65 per page(3)), the Court reiterates its previous recommendation(4) that the TCBEU set up analytical accounts in order to be able to establish, by body and by type of work, the real cost of the various services that it provides.

Premises

8. There was no change during 1998 in the situation observed by the Court in 1997(5): the TCBEU is still occupying premises made available by the Luxembourg authorities, but no agreement has been made between the parties on the basic tenancy conditions applicable to these premises (amount of any possible rent, surface area and facilities rented, duration of the lease, etc.).

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 9 September 1999.

For the Court of Auditors

Jan O. KARLSSON

President

(1) OJ L 314, 7.12.1994, p. 1.

(2) As required under Article 14(3) of Council Regulation (EC) No 2965/94, the accounts for all the Centre's revenue and expenditure for the financial year 1998 were drawn up on 24 March 1999 and forwarded to the Centre's Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 26 March 1999. A summarised version of these financial statements is presented in the tables attached to this report.

(3) See paragraph 4 of the "Analysis of financial management" chapter in the "Revenue and expenditure account".

(4) OJ C 393, 29.12.1997, paragraph 1.6, p. 47 and OJ C 406, 28.12.1998, paragraph 1.6, p. 33.

(5) OJ C 406, 28.12.1998, paragraph 1.13, p. 34.

Table 1

Balance sheet as at 31 December 1998 and 1997

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Table 2

Revenue and expenditure account for the financial years 1998 and 1997

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REPLIES OF THE TRANSLATION CENTRE

Budget

In accordance with Article 4 of Council Regulation (EC) No 2965/94 setting up a Translation Centre for the bodies of the European Union, a representative of each of the bodies, agencies, offices and institutions has a seat on the Management Board and participates in the budget procedure. These representatives inform the management of the Centre of their estimated requirements at Management Board meetings. To complement this procedure, the Centre will put in place a written consultation procedure, in order to avoid discrepancies and draw up more realistic budgets. Nevertheless, as the bodies and institutions have their own budget approval and implementation procedures, the Centre is not in a position to guarantee, by itself, either the consistency of the data or whether they are realistic.

Cash position

The large amount of cash in hand results from the fact that the Centre was still in its start-up phase. During this period, requirements and the amount of contributions were uncertain. The Translation Centre will provide its Management Board with the cash position forecasts laid down in its Financial Regulation and will take appropriate measures to guarantee that obligations are covered in a prudent manner.

Analytical accounts

As indicated in the reply to the report on the financial year ended 31 December 1997, the Centre is aware of the utmost importance attaching to the establishment of an effective accounting system for expenditure, which should be incorporated into the accounting system for the budget (SI 2) and the general accounts. In collaboration with other agencies, the Centre introduced the SI 2 system during the first quarter of 1999; general and analytical accounts modules are currently being developed. The Centre is to strengthen the finance section, in order to ensure that it can respond more efficiently to information needs.

Premises

As regards the "Nouvel Hémicycle" building, the Luxembourg authorities did not submit a draft tenancy agreement to the Centre until 29 October 1998. The Centre's ACPC had a number of comments to make on this draft, which were forwarded to the Luxembourg authorities on 17 December 1998. The Centre is still waiting for a response. Furthermore, on 10 February 1999, the Centre submitted to the same authorities draft headquarters and security agreements to be concluded between the Centre and the Grand Duchy of Luxembourg. Finally, the Centre wrote to the Luxembourg authorities on 26 March 1999, reminding them of these outstanding matters.