Report

on the financial statements of the European Agency for Safety and Health at Work concerning the financial year 2001, together with the Agency's replies

(2002/C 326/02)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the Administrative Board of the European Agency for Safety and Health at Work in conformity 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 2001. In accordance with Article 14(1) of Council Regulation (EC) No 2062/94, 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 rules provided for under 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 examine these accounts.

3. The Court undertook 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. Accordingly, the Court examined the accounting records and applied the audit procedures 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 allowed 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

Implementation of the budget

5. The implementation of the appropriations for the financial year 2001 and of those carried over from the previous financial year is shown in Table 1(3).

6. The appropriations available(4) for the financial year amounted to 14,0 million euro, consisting of 12,0 million euro for the financial year 2001 and 2,0 million in carry-overs from the previous financial year. In addition to its budgetary allocation, the Agency received a subsidy from the Commission of 624000 euro for a multiannual operation to prepare the candidate countries for membership. A total of 126959 euro of these appropriations was committed in 2001 and payments of 17048 euro were made, with the balance being carried over.

7. Of the appropriations for the financial year 2001, 11,3 million euro was committed and payments were made for 5,0 million euro, or 44 % of the commitments entered into. The balance of the appropriations was either carried over (6,2 million euro) or cancelled (0,8 million euro). Out of the operating appropriations (Title III), which totalled 7,6 million euro, a sum of 7,3 million euro was committed, of which 1,5 million euro was paid out and 5,8 million euro had to be carried over to the following financial year. The balance was cancelled. The very large total for carry-overs of operating appropriations is due to the fact that the Commission entrusted the Agency with an important measure (4,5 million euro) during the course of the financial year 2001. The time required for its preparation meant that it could not be implemented in 2001 and all the appropriations allocated to it had to be carried over to the financial year 2002. Irrespective of this factor, however, the carry-over rate for operating appropriations is still very high and the Agency should continue to improve the quality and monitoring of the programming of its activities.

8. The appropriations carried over from the previous financial year totalled 2,0 million euro, 1,7 million of which related to Title III. Out of these appropriations, payments totalling 1,7 million euro were made, 1,5 million euro of which related to Title III, and the balance was cancelled.

Financial statements

9. Tables 2 and 3 set out in summary form the revenue and expenditure account and balance sheet published by the Agency in its Activity Report for 2001.

10. The Agency does not depreciate its fixed assets. It should apply the valuation and depreciation rules adopted by the Commission(5) so that the values entered in the balance sheet provide a faithful picture of the goods comprising its assets.

11. The Agency should step up the measures already taken to minimise the risk of repayments being made twice over and must therefore reimburse mission expenses to the persons it invites to its offices on the basis of original documents, rather than copies.

12. The SI2 budgetary accounting system used by the Agency should not allow the operations for a financial year to be amended after the closure date (15 January of the following financial year), except in the cases provided for in the rules.

Application of financial provisions

13. On 23 February 2001, the Agency implemented the budget heading relating to the field of "Research - Work and Safety" by signing a contract valued at 225000 euro, even though the available appropriations amounted to just 185000 euro. In order to cover the shortfall of 40000 euro between the available appropriations and the contract amount, the Agency used appropriations entered under a different budget heading relating to a programme for small and medium-sized enterprises, without submitting any justification. This practice does not comply with the principle of budgetary specification.

14. The Agency systematically carries over the entire balance of provisional commitments to the following financial year without justifying this on the basis of order forms that have already been issued. For example, 114134 euro was carried over to 2002 under the heading of mission expenses, whereas the payments outstanding amounted to less than 50000 euro. Such carry-overs are not justified.

15. Recoveries totalling 82500 euro had still not been made by the end of the financial year 2001, in breach of the provisions of the corresponding recovery orders. The Agency should take steps to ensure that the orders are enforced.

16. In January 2001, i.e. after the time-limit of 31 December 2000 laid down by the Agency's Director, one national centre requested a subsidy to cover activities costing a total of 184768 euro. In the end, the programme was approved by the Agency in September 2001 for a sum of 27781 euro, which was to be financed entirely by the subsidy from the latter. The justification provided was that, in the previous year, the centre concerned had received a subsidy which had been smaller than that provided for, due to the fact that some of the planned activities had not been carried out. Such a change in the volume of planned activities, along with the length of time needed to reach a final decision, demonstrate the need for the Agency to make its work programming system far stricter.

17. It was only as of the second quarter of 2001 that the Agency developed a genuine system for estimating the volume of translations that would be placed with the Translation Centre for Bodies of the European Union. The system concerned should be developed within the framework of the Agency's programming of its work to avoid local translation companies having to be used in an emergency.

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

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 216, 20.8.1994, p. 5.

(2) 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 2001 were drawn up on 9 April 2002 and forwarded to the Agency's Administrative Board, the Commission and the Court of Auditors. The Court received these accounts on 15 April 2002. A summarised version of these financial statements is presented in the tables attached to this report.

(3) All the tables in this report have been drawn up on the basis of the most precise values possible using the data available. The figures have been rounded up or down for the purposes of presentation, which may result in small discrepancies in the totals. A dash indicates that a value is non-existent or nil, and 0,0 indicates a value lower than the rounding-off threshold.

(4) Non-differentiated appropriations.

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

Table 1

Budget implementation for the financial year 2001NB:

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

Source:

The Agency's data - These tables present, in summary form, the data provided by the Agency in its own financial statements.

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Table 2

Revenue and expenditure accounts for the financial years 2001 and 2000

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NB:

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

Source:

The Agency's data - These tables present, in summary form, the data provided by the Agency in its own financial statements.

Table 3

Balance sheet as at 31 December 2001 and 31 December 2000NB:

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

Source:

The Agency's data - These tables present, in summary form, the data provided by the Agency in its own financial statements.

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The Agency's replies

The European Agency for Safety and Health at Work replies as follows to the Court of Auditors' observations on the Agency's financial statements for the financial year 2001.

Implementation of the budget

Paragraphs 7 and 8

As the Court has pointed out, there was a high carryover rate for operating appropriations from 2001 to the next financial year. This is in particular due to the fact that of the EUR 5,8 million mentioned by the Court, EUR 4,5 million directly concerned the "SME funding scheme 2001 to 2002" which was a new activity desired by the European Parliament and entrusted to the Agency by the European Commission.

As for the rest, within the limits of the statutory framework in which it operates, the Agency made every effort to limit its rate of appropriations carried over. To this end, the topic centres will from now on be paid during the year for which the appropriations were allocated.

Finally, the Agency is constantly seeking to put suitable tools in place or to improve those already in use with a view to producing a lasting improvement in the quality and monitoring of its programming of activities.

Financial statements

Paragraph 10

In reply to the Court's observations, the Agency did at first consider applying the valuation and depreciation rules adopted by the Commission by integrating them into its own regulation. However, in view of the fact that the general recasting of the Financial Regulation currently in progress is about to reach a conclusion, the Agency decided to wait until it was finally approved before ensuring this implementation and to obtain a suitable form of software.

Paragraph 11

To avoid repayments being made twice over, and in harmony with the Court's recommendations, the Agency will stamp the supporting documents (tickets) for travelling expenses for experts' meetings with the words "paid by EU-Agency". It will also as a matter of principle arrange for repayments to be made by bank transfer to the claimants' official bank accounts, the details of which will have been entered onto an Agency form.

Paragraph 12

By all accounts the operation mentioned by the Court was exceptional and concerned an adjustment transaction for a limited amount intended to correct a booking error on a line of expenditure relating to staff, which could not be carried over to the following year.

The Agency will ensure that this kind of operation does not happen in the future.

Application of the financial provisions

Paragraph 13

The contract to which the Court referred (EUR 225000) concerned the carrying-out of two distinct series of tasks concerning the area of "Research - work and safety": one relating specifically to this field (budget Item 3 0 2 2: EUR 185000), the other also concerns this field but could relate to the field of "Small and medium-sized enterprises (SMEs)" (budget Item 3 0 7 1: EUR 40000). Therefore, in order not to allow the issue of which item to book them under to delay the start-up of this action, the Agency decided to finance and enter the expenditure onto these two budget headings and within the limits of the available appropriations.

Paragraph 14

In the majority of cases, the appropriations carried over concern the outstanding balances payable on contracts or order forms for the current financial year. In certain cases, the amounts had not been specifically set as they concerned invoices in which the variation in costs depends on the type of utility or services provided (e.g.: electricity, telephones, maintenance).

As far as mission expenses are concerned, the Agency decided to carry over the entire balance of provisional commitments so as to be able to make repayments on outstanding mission expenses.

The Agency will follow the Court's recommendations with respect to outstanding balances in order to make the appropriations carried over conform to them.

Paragraph 15

The Agency will follow the Court's recommendations by setting up a system for conducting monthly checks on pending recovery orders.

These recovery orders essentially concerned projects for which the final implementation reports had not been sent by the date required. Since then these situations have been regularised or are in the process of being regularised, which will enable the recovery orders to be cancelled. In other cases, the non-recoveries in 2001 were due to problems connected with not having received the bank documents in good time.

Paragraph 16

As far as circumstances and procedures allow, and in accordance with the Court's recommendations, the Agency will seek to improve its work programming system in terms of a limitation of change in the volume of activity, reducing delays with respect to implementing programmes, reducing the length of time needed to reach a decision and respect for the principle of the annual nature of the budget (see the section on "Implementation of the budget").

Paragraph 17

Profiting from the experience of the financial year 2001, by December 2001 the Agency had drawn up a first estimate of the volume of translation requests for 2002. By making a monthly comparison between the estimated numbers of translation requests and those actually made, as well as regular revisions of the estimates, it should henceforth be easier to ensure a good follow-up to the allotted appropriations.