Report

on the financial statements of the Community Plant Variety Office for the financial year ended 31 December 2000, together with the Office's replies

(2001/C 372/10)

CONTENTS

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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 2000. In accordance with Article 110 of Council Regulation (EC) No 2100/94, the budget was implemented on the responsibility of the President of the Office. This responsibility includes drawing up and presenting the financial statements(2) in accordance with the internal financial provisions provided for in Article 112 of Council Regulation (EC) No 2100/94(3). 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 particular nature 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 2000 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 (ANGERS) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2000

Implementation of the budget and budgetary accounts

5. The implementation of the budget for the financial year 2000 is presented in Table 1(4).

6. The most noteworthy point is the scale of the cancellations of appropriations carried over from 1999 (36 %), and more specifically the cancellations of operating appropriations (Title III), 0,9 million euro or 63 % of which had to be cancelled in 2000. This phenomenon has become larger from year to year (0,2 million euro in 1998 and 0,5 million euro in 1999). One of the consequences of this is that the accounts do not fully reflect legal commitments that are spread over more than two years.

7. In order to carry over appropriations from one year to another, the Office calculates the appropriations to be carried over not on the basis of the real amounts still to be settled, but on the basis of the unutilised balance of provisional commitments.

8. The Court(5) recommends that the Office hold discussions with the Commission to check that the Financial Regulation applicable to the general budget is suited to the Office's specific characteristics, not least in the light of the proposal for the recasting of the Financial Regulation presented by the Commission(6) and the Court's opinion on that proposal(7).

Financial statements and bookkeeping

9. Tables 2 and 3 present, respectively, the revenue and expenditure account for the financial year 2000 and the balance sheet as at 31 December 2000.

10. Until now, the Office has not taken depreciation into account in its balance sheet. This will be included in the balance sheet as of the financial year 2001. A procedure should be initiated whereby the inventory is no longer used to record write-downs of obsolete equipment, and office equipment in particular, or property of a low value (less than 400 euro(8).

11. Cheques issued by the Office are not entered in the accounts and there is no system for ascertaining the outstanding amount represented by cheques issued but not cashed. The Office estimated that the sum total of payments pending amounted to 12000 euro at the beginning of March 2001. The Office should adjust its accounting system in order to take into account the cheques it has issued and evaluate the payments outstanding. In addition, the security surrounding the Office's cheque books should be improved (physical security, record of the numbers of unused cheques).

12. All applications for the protection of plant varieties, along with the corresponding payments, are recorded in an electronic register which lists the application and examination fees along with the annual fees. When incorrect amounts have been paid or when additional fees are payable, the repayments to be made or the supplementary payments to be requested are recorded in separate accounts. The register should be adjusted so as to allow for the recording of all the operations relating to a given file.

Management

13. The Office's rules provide for the creation of a reserve (Article 6(d) of its Financial Regulation). The purpose of this reserve is to maintain the Office's financial autonomy in relation to the Commission. For reasons of prudence, a very sizeable reserve has been built up in recent years. In 2000 this reserve totalled 8,6 million euro, which is more than the budget for 2001 (8,2 million euro).

14. The initial findings of an on-going study of the real cost of examinations have led the Office to provisionally increase the payments made to examination centres by between 20 and 50 %. For commercial reasons, and considering the size of its reserve, the Office has nevertheless decided not to change the examination tariffs and has reduced the fee for registration applications. A methodology for analysing costs has been adopted, and once the necessary data have been collated the payments made to the centres will be reconsidered. The Office should complete its analysis of the real cost of examinations by national centres and repeat this exercise at regular intervals so that it can adjust its tariffs accordingly.

Management of human resources

Staff policy

15. Concerning personnel management, its is important to be able to call on documentation on general staff policy and the various facets thereof (staff reports, promotion, professional training). Staff policy should be built around descriptions of tasks based on the Office's objectives and duties, in order to establish a rational management system. At the end of 2000, the only documents available related to specific issues or were preparatory documents.

16. Concerning the description of tasks, a draft document exists which is based on a description of the activities of members of staff in the administrative and financial unit, and on the amendments to be made to this in the light of that unit's needs. In the case of the other units, discussions are taking place but no document has yet been produced. There is currently no documentation concerning employment forecasts.

Keeping of staff files

17. The staff's financial entitlements change as a function of their career bracket and of other factors such as their family situation. Their financial entitlements are established on the basis of supporting documents provided at the time they take up their duties and on statements that they are required to make in the event of any changes liable to affect these entitlements. The Office does not have a system for monitoring financial entitlements and should ensure that regular checks are conducted on its staff's financial entitlements.

Changes in staff and in the Office's activities

18. Prior to 2000, the Office's establishment plan only provided for temporary posts. In 2000, it provided for the creation of 14 permanent posts, eight of which were filled at the beginning of 2001. In addition to the temporary members of staff there are auxiliary members of staff, whose term of employment is limited to a maximum of one year. Table 4 shows the changes in the Office's staff and the breakdown by type of post. It is clear from this table that using auxiliary and agency staff only enables the Office to partially cover staff vacancies (permanent and temporary members of staff). Expenditure on agency staff more than tripled between 1996 and 2000 and stood at 0,23 million euro in the financial year 2000.

19. A specific type of recruitment model emerges concerning the recruitment of the staff at the Office. Of the 35 people that the Office has recruited since it was created, 18 have been recruited as temporary members of staff and 17 as auxiliary members of staff. After taking departures into account, of the 28 members of staff working at the Office at the end of 2000, 26 were temporary members of staff and two were auxiliary members of staff. This change in the relative numbers of temporary and auxiliary staff has been brought about through a series of internal procedures.

20. Members of staff initially recruited on an auxiliary basis (often after working as temporary agency staff, in the case of the lower categories) have become temporary members of staff as the result of procedures for the publication of posts which, in the main, were limited to the Institutions.

21. The essentially internal nature of this staff management model is reflected in the fact that no staff have been recruited by way of an open competition procedure of the type recommended for the Community Institutions (see Table 5). At the end of 2000, the Office held internal competitions which led to the establishment of eight members of staff as of 1 January 2001. On average, expenditure on recruitment totalled around 2160 euro per member of staff hired.

22. For the purposes of the audit, the members of staff were grouped into two categories:

- members of staff responsible for support activities (support staff), which is to say activities which ensure the on-going operation of the Office (e.g. administrative, accounting and secretarial services, etc.);

- the other, so-called "operational" members of staff, who contribute directly to achieving the Office's objectives.

23. On average, 80 % of the category A staff can be considered operational members of staff. In determining whether or not the duties of the other categories of staff, who in spite of the category to which they belong perform tasks which are not straightforward executive and support tasks, the sample shows that when all categories are taken together, 33 % of the Office's staff could be considered operational members of staff.

24. Table 6 illustrates the changes in staff-related costs and in administrative expenditure over the period 1995 to 2000. Expenditure on salaries has evolved in line with changes in staff numbers, allowing for the effect of automatic salary increases.

25. Among the other staff-related costs, the analysis focused more specifically on expenditure on professional training and on administrative expenditure, including IT expenditure. Expenditure on professional training increased a little more quickly than staff numbers. Administrative expenditure rose rapidly due to spending on the new building and is therefore exceptional in nature.

26. In order to grasp the relationship between the activities of the Office and the changes in its staff numbers and in staff-related costs, the latter were compared to fluctuations in the total revenue. In fact, the revenue is an expression both of the number of applications submitted to the Office and of the respective difficulty of processing these applications, which is reflected in the differences between the fees charged.

27. This comparison suggests that the Office should keep a watchful eye on the increase in its staff numbers, which is almost in line with the growth in its activities over the period 1997-2000. This trend is confirmed by a comparison of the rates of increase in expenditure under Title III, which brings together expenditure connected with the realisation of the Office's objectives, and expenditure under Titles I and II (Staff expenditure and Administrative expenditure): while in overall terms the increase in administrative expenditure is lower than that in operating expenditure, it has tended to accelerate in recent years.

Conclusion

28. Generally speaking, it is clear that even if the Office has been unable, since its inception, to take on the numbers of staff it has requested during the budgetary procedure, this has not had a marked effect on the development of its activities, thanks mainly to the recruitment of auxiliary members of staff.

29. The Office has based its approach to the recruitment of staff on methods that are limited to the Institutions in terms of the amount of advertising of posts. Auxiliary members of staff, who have often already been hired as temporary agency staff, frequently become temporary members of staff by way of internal procedures and, in some cases, permanent members of staff following an internal competition. This approach reduces recruitment lead times and costs and allows the staff recruited to be assessed over a long period (see paragraph 21).

30. Given the anticipated expansion of its activities and the increase in its staff numbers, it would perhaps be desirable for the Office to join forces with the Institutions and with the other decentralised bodies to recruit staff from as wide a base as possible in the case of support activities posts and of its operational activities that call for administrative qualifications. Generally speaking, moreover, it should also improve its staff management and information system.

This Report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 10 October 2001.

For the Court of Auditors

Jan O. Karlsson

President

(1) OJ L 227, 1.9.1994, p. 27.

(2) In accordance with Article 111(2) of Council Regulation (EC) No 2100/94, the accounts for all the Office's revenue and expenditure for the financial year 2000 were drawn up on 16 March 2001, and were sent to the Office's Administrative Council, the Commission and the Court of Auditors, and the latter received them on 26 March 2001. A summary of the balance sheet at 31 December 1999 and 31 December 2000 and of the revenue and expenditure account for the financial years 1999 and 2000 is given in the tables at the end of this report.

(3) OJ L 227, 1.9.1994, p. 28.

(4) All the tables in this report have been calculated on the basis of the most precise values possible for the data used. These have been rounded up or down in the presentation of the figures, which may give the impression that calculation errors have been made. A dash is used to indicate that a value is non-existent or nil, and 0,0 indicates a value below the rounding-off threshold.

(5) Opinion No 2/2000 on a proposal to amend the Financial Regulation of the Community Plant Variety Office, adopted by the Court of Auditors on 5 October 2000.

(6) COM (2000) 461 final, 17 October 2000.

(7) Opinion No 2/2001 of the Court of Auditors of the European Communities, 8 March 2001.

(8) Article 119 of the implementing procedures, on the basis of Article 54 of the Financial Regulation of 7 April 1998 applicable to the Office.

TABLES 1 TO 6

Table 1

Implementation of the budget

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Table 2

Revenue and expenditure account for the financial years 2000 and 1999

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NB:Discrepancies in the totals are due to the effects of rounding.

Source:Prepared by the Court on the basis of data compiled by the Office.

Table 3

Balance sheet as at 31 December 2000 and 31 December 1999

NB:Discrepancies in the totals are due to the effects of rounding off.

Source:Prepared by the Court on the basis of data compiled by the Office.

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Table 4

Changes in staff numbers

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PE: Permanent employees.

TE: Temporary employees.

AE: Auxiliary employees.

Table 5

Analysis of changes in staff numbers

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Table 6

Changes in staff and related costs

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The office's replies

6, 7 & 8. The CPVO will follow the Court's recommendation in paragraph 8.

10. The Office has developed a procedure for recording write-downs of obsolete equipment and is currently introducing a depreciation policy to be followed from the financial year 2001.

11. The CVPO will follow the Court's recommendation in paragraph 11.

12. The Office agrees with the Court's observation in this paragraph and has already begun to adapt its computer system, PVR, to allow for the recording of all the operations relating to a given file.

16. There are job descriptions for all posts at the Office, with the exception of one or two posts in the Technical Unit. Job descriptions for these posts are being prepared.

17. A system for checking financial entitlements of staff has been introduced.

20 and 29. The CPVO publishes all vacancies for temporary members of staff on the Internet and also in the institutions' vacancy notices. Permanent members of staff are appointed after an internal competition.