Report

on the financial statements of the European Training Foundation for the financial year 2001, together with the Foundation's replies

(2002/C 326/07)

CONTENTS

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THE COURT'S OPINION

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(1).

2. The Court has examined the financial statements of the European Training Foundation for the financial year ended 31 December 2001. In accordance with Article 11(1) of Council Regulation (EEC) No 1360/90, the budget was implemented on 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 provided for in Article 12 of Council Regulation (EEC) No 1360/90. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to audit these accounts.

3. The Court carried out the 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 applied such other procedures as it deemed necessary in the circumstances. Through 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 2001 are reliable and that the underlying transactions, taken as a whole, are legal and regular.

MAIN OBSERVATIONS

Budgetary implementation

5. Table 1(3) shows the implementation of the appropriations for the year 2001 and the appropriations carried over from the previous financial year.

6. The appropriations available amounted to 19,4 million euro, of which 16,8 million euro were granted for 2001 and 2,6 million euro carried over from the previous financial year. Almost all of the appropriations for the financial year 2001 were committed and disbursed in payments amounting to 13,2 million euro, i.e. 79 % of the commitments entered into. The balance of the appropriations was either carried over (3,5 million euro) or cancelled (0,5 million euro). Almost all of the operating appropriations (Title III), i.e. 5,2 million euro, were committed and a total of 2,6 million euro was carried over. The extent of these carry-overs, equal to 50 % of the commitments, reveals the need for the Foundation to improve the quality of its planning and the monitoring of its work. The appropriations carried over from the previous financial year totalled 2,6 million euro, 0,2 million of which lapsed at the end of the financial year. The Foundation should do its utmost to reduce the delays in the implementation of its annual programme in order to improve compliance with the principle of budgetary annuality.

Financial statements

7. The revenue and expenditure account and balance sheet published by the Foundation in its activity report for the financial year 2001 are presented in summary form in Tables 2 and 3.

8. In previous reports(4) the Court drew attention to the management of the PHARE and TACIS programmes. In 2001 the total sum of these programmes amounted to 232,8 million euro, 210,0 million of which were committed, giving rise to 185,9 million in payments. These programmes are managed outside the budget. The balance (37,8 million euro at 31 December 2001) of the bank accounts available to the Foundation for managing these programmes does not appear in the financial statements. Financial information in respect of these programmes is shown by the Foundation in an annex to its financial statements.

9. The Foundation does not depreciate its fixed assets. It should apply the valuation and depreciation rules adopted by the Commission(5) so that the book values faithfully reflect the real value of the goods which form part of its assets.

10. The inventory records are not reliable because no physical inventory has been carried out since 1999. They include lost or obsolete goods and no inventory withdrawal can be made. The Foundation should give priority to updating its inventory.

Application of the financial provisions

11. The Foundation often makes use of framework contracts. These contracts stipulate the maximum amount of purchases that may be made. No system has been introduced, however, to ensure that this maximum is not exceeded.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 25 and 26 September 2002.

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 131, 23.5.1990, p. 4.

(2) As required under Article 11(3) of Council Regulation (EEC) No 1360/90, the accounts for all the Foundation's revenue and expenditure for the financial year 2001 were drawn up on 27 March 2002 and forwarded to the Foundation's Governing Board, the Commission and the Court of Auditors. These accounts were received by the Court on 8 April 2002. A summarised version of these financial statements is presented in the tables annexed to this Report.

(3) All the tables in this Report were drawn up on the basis of the most exact values possible for the data used. For presentation purposes, the figures were rounded up or down, which may produce minor differences in the totals. A dash indicates a non-existent or nil value and 0,0 indicates a value below the rounding threshold.

(4) See paragraph 11 of the report concerning the financial year 1999 (OJ C 373, 27.12.2000, p. 34).

(5) Commission Regulation (EC) No 2909/2000 of 29 December 2000 (OJ L 336, 30.12.2000, p. 75).

Table 1

Implementation of the budget for the financial year 2001((The budget does not include the appropriations granted by the Commission to finance programmes which the Foundation manages on its behalf.))NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

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Table 2

Revenue and expenditure account for the financial years 2001 and 2000((The revenue and expenditure account and balance sheet only take account of the Foundation's specific activities: they ignore the managed programmes.))

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NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

Table 3

Balance sheet as at 31 December 2001 and 31 December 2000((The revenue and expenditure account and balance sheet ONLY take account of the Foundation's specific activities: they ignore the managed programmes.))NB:

Any discrepancies in totals are due to the effects of rounding.

Source:

Foundation data. These tables summarise the data supplied by the Foundation in its own financial statements.

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The Foundation's replies

Financial statements

8. Budget management of Phare and Tacis programmes

The Foundation is working on the integration of Tempus conventions into the budgetary accounting system (SI2), starting from the technical assistance conventions. Tempus budgets have so far had extra-budgetary management as specifically requested by DG EAC.

As regards other Phare, Tacis, and CARDS conventions, the Foundation is evaluating the cost-benefit ratio of transferring them into SI2 as well, since project-management services given to the Commission are being phased out according to the agreed mid-term strategy of the Foundation.

9 and 10. Depreciation and inventory

The Foundation intends to apply depreciation to its non-financial fixed assets as from this year's accounts. The depreciation will be applied retroactively and en bloc to account for what should have been deducted in previous years. The depreciation rates and procedure applied will be based on Regulation (EC) No 2909/2000.

The in-house development of an electronic asset-management system (inventory) has just been completed. The system is currently undergoing testing, and some minor modifications will be made before implementation.

The Foundation plans to launch a complete input of property records in the new inventory system by the end of November to replace completely the old systems and records. The record input will be based on a physical inventory to be carried out first.

In this framework, the Foundation has drafted guidelines, including work flows and responsibilities for asset identification, registration, management, disposal and depreciation that comply with Community regulations in force. These guidelines are available upon request.

Application of the financial provisions

11. Framework contracts

By nature, framework contracts do not indicate a maximum amount, but only a list of prices for the various items/services, which might be purchased under the contract. In the tender documents for the selection of framework contractors the estimated volume/amount of the services requested under the contract is often mentioned.

The Finance unit and Legal service are currently working to put in place a mechanism to control the level of spending under each running framework contract.