REPORT on the financial statements of the European Training Foundation (ETF-Turin), together with the Foundation's replies (97/C 81/05)

(For the period from 1 November 1994 to 31 December 1995)

1.1. This report is addressed to the Governing Board of the European Training Foundation in accordance with Article 11 (4) of Council Regulation (EEC) No 1360/90 of 7 May 1990 (1).

1.2. The Court of Auditors has examined the financial statements of the European Training Foundation for the financial years 1994 and 1995. The budget was implemented under the responsibility of the Director of the Foundation in accordance with Article 11 (1) of Council Regulation (EEC) No 1360/90. His responsibilities include the preparation and presentation of the accounts (2) in accordance with the internal financial provisions set out in Article 11 (3) of Council Regulation (EEC) No 1360/90. Article 188c of the Treaty establishing the European Community requires the Court of Auditors to audit these accounts. This report constitutes the first audit of the Foundation.

1.3. The Court conducted its audit in accordance with generally accepted auditing standards in so far as they are applicable in the Community context. The Court carried out checks on the accounts and accounting records and also applied such additional auditing procedures as it considered necessary in this context. The main observations resulting from the Court's audit are presented in the second part of this report.

1.4. The financial statements for the financial years 1994 and 1995 are reliable and the underlying operations were carried out, on the whole, in accordance with the rules concerning legality and regularity.

Main observations concerning the implementation of the budget of the European Training Foundation for the financial years 1994 and 1995

Budget accounts

1.5. The present system allows a posteriori changes to be made to the entries with no subsequent record of their having been made. This system, and the systematic use of the imprest account, may lead to spending in excess of available appropriations.

Imprest account

1.6. During 1995, the Foundation used an imprest account for all payments. This is not in accordance with Article 43 of the Financial Regulation of the Foundation, which allows this procedure only for certain categories of expenditure. In addition, the regularization of this expenditure in excess was delayed because the relevant documents had to be sent to the Financial Controller in Brussels for approval.

Award of contracts

1.7. The Foundation concluded several supply contracts for equipment involving a total of ECU 0,4 million in order to utilize the appropriations available at the end of the financial year. In so doing it did not observe the Regulations concerning the award of contracts and, in particular, the Regulations concerning invitations to tender (Articles 45 to 51 of the Financial Regulation of the Foundation).

The Financial Controller

1.8. In the light of the present situation at the Foundation, the appointment by the Commission of a Financial Controller to work solely for the Foundation might improve its system of internal control.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 10 October 1996.

For the Court of Auditors

Bernhard FRIEDMANN

President

>TABLE>

>TABLE>

>TABLE>

(1) OJ No L 131, 23. 5. 1990, p. 4.

(2) As required by Article 11 (3) of Council Regulation (EEC) No 1360/90, the accounts all revenue and expenditure of the Foundation for the financial year 1995 were prepared on 31 March 1996, the date on which the accounts were signed by the Director of the Foundation and submitted to the Commission, to the Governing Board and to the Court of Auditors. These accounts were received by the Court on 9 April 1996. The abridged version of these financial statements is presented in the tables annexed to this report.

THE FOUNDATION'S REPLIES

1.5. Budget accounting

The Foundation shares the opinion of the Court. It has in any case performed a very active role in establishing a single accounting and budget management system in all agencies. Discussions are now being held with the competent services of the Commission, which should make it possible to eliminate the concerns expressed by the Court thanks to the application of the new budget management system which should become effective starting from 1 January 1997.

It should be noted that no appropriations were exceeded during the period in question.

1.6. Imprest accounts

It should be noted that the imprest accounts were not used for equipment purchases or for the Foundation's contribution to the building, which accounted for a significant portion of the budget. Furthermore, use of the imprest accounts has been reduced in compliance with Article 43 of the Financial Regulations, and all accounting documents for a given month are sent to the Financial Controller in Brussels between the 10th and the 20th of the following month.

1.7. Preparation of contracts

On the one hand, the contracts in question, which concern activities and projects in connection with the Foundation's work programme, account for a very minor portion of the Foundation's activities both in terms of their number and their budget impact.

On the other hand, it is true that the calls for competitive bidding which led to these contracts took place informally. At the time, this procedure was chiefly selected for reasons of urgency. In addition, the contracts in question dealt with the organization of conferences and seminars on behalf of and in the name of the Foundation, and under its close control. The associated budget was divided into two parts: payment of fees, a fixed amount of less than ECU 12 000, and operations as determined in advance by the Foundation and paid on presentation of vouchers. On the basis of these elements, the Foundation considered that the actual contract amount did not exceed ECU 12 000.

When it was found at the beginning of 1996 that the Court did not share this opinion, it was decided to abandon this system.

1.8. Financial Controller

The Foundation shares the opinion of the Court.