Report

on the financial statements of the Community Plant Variety Office (CPVO - Angers) for the financial year ended 31 December 1998, together with the Office's replies

(1999/C 372/10)

CONTENTS

>TABLE>

The Court's opinion

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(1).

2. The Court has examined the financial statements of the Community Plant Variety Office for the financial year ended 31 December 1998. In accordance with Article 110 of Regulation (EC) No 2100/94 the budget was implemented under the responsibility of the President of the Office. This responsibility included the drawing-up and presentation of the financial statements(2) in accordance with the internal financial provisions provided for in Article 112 of Council Regulation (EC) No 2100/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit those 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 applied such 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 Community Plant Variety Office for the financial year ended 31 December 1998

New premises

5. In 1998 the Office purchased a detached building (part of it a listed building) situated in the centre of Angers, which, until recently, was used as a hotel and restaurant.

The interior layout of the building and the impracticality of some areas of it make it impossible to accommodate all the Office's staff of around 30 people. For that reason it has been necessary to purchase additional office space in a building behind the main building. The two buildings have a total area of 1150 m2, only part of which will be usable as offices. The interior of the main building is to be totally redone, in order to accommodate the change of use from hotel and restaurant to offices. A preliminary survey estimated the cost of essential work as EUR 0,8 million, the amount which was entered in the 1999 budget. The cost of the initial design by the architect finally selected was around EUR 1,3 million, an increase of 61 % on the estimate used at the time of the decision to buy.

The estimated total for this transaction now breaks down as follows:

>TABLE>

The total amount actually charged to the Office's budget will be reduced by the remaining part of the EUR 1,524 million subsidy awarded by the local authorities to cover the costs of accommodating the Office at Angers. As of 31 December 1998 EUR 0,172 million of the subsidy had already been used in connection with the occupation of the Office's current premises.

In view of the nature of the conversion work, the Office should take care to ensure that the proposed budget is adhered to.

Advisory Committee on Procurement and Contracts (ACPC)

6. The ACPC comprises three temporary officials of the Office plus a representative of the financial controller in the capacity of observer. Most of the draft decisions submitted to the ACPC are from the President of the Office, who determines the work to be carried out and the enterprise to which the contract is to be awarded. Where the authorising officer is the President of the Office, it would be preferable for him to nominate a manager to submit the file to the ACPC.

Language courses

7. Expenditure on language courses for staff and members of their families for the 1998 financial year amounted to ECU 48524. The courses were given and billed by only one enterprise. Since the amount in question was over the threshold above which the ACPC must be consulted, the matter was referred to that Committee. The statement of grounds submitted to the Committee by the President of the Office with the draft decision announcing his intention of continuing to work with the same enterprise for courses in all languages was insufficient and no time limit was given.

Staffing policy

8. The entire permanent workforce of the Office is made up of temporary officials, of whom only three have contracts for an unlimited period. There is considerable use of agency workers and the expenditure on employment of this type amounted to ECU 136382, an increase of 67 % compared with the previous year. Despite all its efforts, the Office finds it difficult to recruit administrative staff on the basis of short-term temporary contracts, while trying to preserve a balance between the various nationalities.

Missions and reimbursement of expenses to experts and members of the administrative council

9. The Office reimburses part of the expenses of experts and members of the administrative council through personal accounts. Reimbursement to national administrations should be the rule for all experts and members of the administrative council, any exception requiring due justification.

10. In addition, travel tickets should always be presented, including those for rail travel, and stamped clearly to show that they are the object of a refund. In the case of air travel, the boarding card should be presented to the Office.

Delay in setting examination fees

11. The basic Regulation(3) provides, as regards proceedings before the Office, that "by 27 April 1997 the Administrative Council shall have determined uniform methods for calculating the costs..., which shall apply to all designated Examination Offices". The administrative council has still not taken such a decision. The initial deadline of 27 April 1997 has been postponed several times. The latest decision on this subject was taken during the meeting of the administrative council on 7 and 8 April 1998 and deferred the target date to 31 December 1999.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 11 November 1999.

For the Court of Auditors

Jan O. KARLSSON

President

(1) OJ L 227, 1.9.1994, p. 1.

(2) Pursuant to Article 111(2) of Regulation (EC) No 2100/94 the accounts for all the Office's revenue and expenditure for the financial year 1998 were drawn up on 26 March 1999 and were sent to the Office's Administrative Council, the Commission and the Court of Auditors and the latter received them on 30 March 1999. The summary form of those financial statements is published in the tables annexed to this report.

(3) Commission Regulation (EC) No 1239/95 (OJ L 121, 1. 10. 1995, p. 37).

Table 1

Balance sheet as at 31 December 1998 and 1997

>TABLE>

>TABLE>

Table 2

Revenue and expenditure account for the financial years 1998 and 1997

>TABLE>

Replies of the Office

New premises (paragraph 5)

The total area of the two buildings purchased by the Office is 1150 m[sup2 ].

The area usable as offices is 418 m[sup2 ] in the first building and 188 m[sup2 ] in the second. The remaining area is composed of utility areas that will be used for meeting rooms, waiting rooms, file depositories, control rooms, washrooms and corridors.

Concerning the refurbishment work, the Office will carefully respect the criteria of sound financial management mentioned in Article 2 of its Financial Regulation.

Advisory Committee on Procurement and Contracts - ACPC (paragraph 6)

Except for exceptional cases that may justify submission of files to the ACPC by the President of the Office, the files, in keeping with past practice, will be submitted by a manager from the Financial and Administrative Unit of the Office.

Language courses (paragraph 7)

In the case mentioned by the Court, the draft decision submitted to the ACPC was justified by the good past experience with the provider of the services (language courses) and the attractive price of these services.

In consideration of the observations issued by the Advisory Committee on Procurement and Contracts (ACPC), the contracts drawn up with this contractor (fixed-term contracts) were renewed only after an official evaluation of the courses by the participants (quality of the enterprise and teachers, content and quality of the courses). Furthermore, the improvement levels of the participants' language skills was and is tested on a regular basis.

However, in order to limit the long-term provision of language courses for the members of staff's families, the President of the Office will introduce a maximum time limit on the availability of such courses.

Staffing policy (paragraph 8)

Eleven nationalities are currently represented on the Office's staff.

Through its new policy, the Office plans to phase out its use of agency workers, to extend the contracts of temporary staff and to organise competitions for certain staff posts within the Office, with a view to being established, in accordance with the procedures laid down in the Staff Regulations.

Missions and reimbursement of expenses to experts and members of the administrative council (paragraphs 9 and 10)

The Office undertakes to follow the reimbursement procedure recommended by the Court.

Delay in setting examination fees (paragraph 11)

A call for expressions of interest was organised with a view to recruiting a specialised accounting company to draw up methods for calculating the costs of technical examinations, which shall apply to all examination offices. This call for expressions of interest was, however, unsuccessful.

The Office therefore has recruited as temporary agent a chartered accountant (auditor) to perform this task. The administrative council has in its meeting of 28 and 29 September 1999 decided to continue until 1 January 1999 payment for tests performed on request of the Office on the basis of the so-called in/out principle (the examination fee received from an applicant is integrally paid to the examination office that tests the variety in question). The Office is of the opinion that the level of technical fees on the average is in line with the testing costs involved.