Report

on the financial statements of the Translation Centre for the bodies of the European Union for the financial year 2001, together with the Centre's replies

(2002/C 326/05)

TABLE OF CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the Management Board of the Translation Centre for the Bodies of the European Union in conformity with Article 14(4) of Council Regulation (EC) No 2965/94(1).

2. The Court of Auditors has examined the financial statements of the Translation Centre for the Bodies of the European Union for the financial year ended 31 December 2001. In accordance with Article 14(1) of Council Regulation (EC) No 2965/94, the budget was implemented under the responsibility of the Director. This responsibility includes the drawing-up and presentation of the financial statements(2) in accordance with the internal financial provisions provided for in Article 15 of Regulation (EC) No 2965/94. The Court is required pursuant to Article 248 of the Treaty establishing the European Community to examine these 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 other audit 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

Implementation of the budget

5. The implementation of appropriations for the financial year 2001 and of the appropriations carried over from the previous financial year is shown in Table 1(3). It should be noted that staffing expenditure (Title 1) includes not only expenditure on the Centre's own staff but also expenditure on external translators. The appropriations available totalled 27,2 million euro, of which 24,8 million were for the financial year and 2,4 million had been carried over from the previous financial year. Commitments in respect of the appropriations for the financial year proper amounted to 16,8 million euro, which led to payments totalling 15,0 million euro. The balance of the appropriations was either carried over (1,8 million euro) or cancelled. The considerable value of the cancellations (8,1 million euro) is explained by the fact that the reserve (3,9 million euro) was not used. The appropriations carried over from the previous financial year totalled 2,4 million euro, 2,2 million of which resulted in payments (the balance was cancelled).

Financial statements

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

7. Since April 1997, the Centre has occupied the premises placed at its disposal by the Luxembourg authorities even though the conditions for this were never laid down in a formal agreement(4). At its meeting of 14 March 2002, the Centre's Management Board decided to establish a reserve as from 2002 to meet any demands made by the Luxembourg authorities as regards the cost of these premises.

Purchases of goods and services

Estimation of requirements

8. Generally, the Centre should improve its system for estimating requirements and for planning the totality of its purchases by going beyond the current framework, which is essentially annual. It could be more formalised and documented, thereby enabling estimates to be compared with actual requirements.

Cooperation with the Institutions and other Community bodies

9. The Centre participates in the Interinstitutional Group for the Harmonisation of Purchasing Procedures and in interinstitutional calls for tender, as well as in exchanges of information on purchases of everyday goods and services. Regarding the organisation of invitations to tender for translations, coordination between the Community bodies could be improved. Furthermore, differences in approach between the Institutions and the Centre as regards the appraisal and utilisation of qualitative criteria for translations must be resolved so as to enable joint calls for tender, which would make it possible to obtain better conditions.

Evaluation of bids

10. Very often, and particularly in the case of external translation services and computer systems, the Centre uses a value-for-money ratio to select tenderers. The Centre justifies this approach in the interests of prudence and economy: the better the product, the greater the likelihood that the cost of using or maintaining it will be lower (e.g. the cost of revising translations or of maintaining computer systems).

11. For the purchase of goods and services other than external translations, quality-assessment procedures vary from contract to contract even if they concern purchases of the same kind. As a rule, the evaluation is carried out by a committee made up of three members who give their opinions on the various aspects of the quality of the product on the basis of the documents produced. In certain cases, the individual opinions are cited; in others, the result is an amalgam of the various opinions expressed.

12. The qualitative criteria selected should be:

- more standardised for purchases of the same kind;

- based more on objective indicators which are as quantifiable as possible;

- applied more as part of a precise procedure so as to guarantee the independence and impartiality of the members of the evaluation committee.

13. In order to facilitate the assessors' work, the format of the replies to be provided by tenderers should be developed and specified so as to make them as comprehensive and as comparable as possible.

Evaluation of external translation services

14. Over time, the provisions of the contracts concluded with translation agencies have become more precise and rigorous, in particular as regards quality control.

15. Any document translated by external translators is examined by one of the Centre's revisers in order to assess its quality. The Centre's customers are also invited to give their opinions as to the quality of the translations. However, the complexity of the documents to be translated differs from one translation agency to another, which makes it difficult to compare their work in terms of value for money. The Centre and the other Community bodies that use external translation services should consult one another with a view to defining common criteria for the quality of translations.

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 314 of 7.12.1994, p. 1.

(2) As laid down in Article 14(3) of Council Regulation (EC) No 2965/94, the accounts for all the Centre's revenue and expenditure for the financial year 2001 were established on 14 March 2002 and sent to the Centre's Management Board, the Commission and the Court of Auditors. These accounts were received by the Court on 21 June 2002. A summarised version of these financial statements is presented in the tables attached to this report.

(3) All of the tables in this report have been drawn up on the basis of the most exact possible values of the data employed. For presentation purposes, the figures have been rounded off, which may create very minor differences in the totals. A hyphen indicates a non-existent or zero figure and 0,0 indicates a figure below the rounding-off threshold.

(4) See paragraph 13 of the Report concerning the financial year 2000 (OJ C 372, 28.12.2001, p. 29).

Table 1

Implementation of the budget for the financial year 2001NB:

The totals may include differences due to rounding off.

Source:

Data compiled by the Centre - These tables summarise the data provided by the Centre in its own financial statements.

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Table 2

Revenue and expenditure account for the financial years 2001 and 2000

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NB:

The totals may include differences due to rounding off.

Source:

Data compiled by the Centre - These tables summarise the data provided by the Centre in its own financial statements.

Table 3

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

The totals may include differences due to rounding off.

Source:

Data compiled by the Centre - These tables summarise the data provided by the Centre in its own financial statements.

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The Centre's replies

MAIN OBSERVATIONS

Financial statements

7. The Luxembourg authorities have expressed on several occasions their intention to deal with this matter, as well as to approve the seat and security issues once the financing plan for the permanent seat of the Centre has been established. At its meeting on 14 March 2002, the Management Board established budget heading 10 0 0 3 "Reserve for potential obligations relating to rental of buildings" in the preliminary draft budget for 2003 to take account of the uncertainty regarding any obligations arising from the premises made available to the Centre. The Management Board will examine progress made with regard to this matter at its next meeting on 24 October 2002.

Purchases of goods and services

Estimation of requirements

8. The Centre has taken good note of the Court's observations.

Cooperation with the institutions and other Community bodies

9. The Centre completely shares the Court's opinion. For the organisation of calls for tenders, the Centre is already striving to pursue greater interinstitutional cooperation as far as possible, and special efforts have been made to harmonise documents relating to calls for tenders to enable greater economies of scale.

Despite this, it must be borne in mind that a number of statutory, budgetary and policy constraints remain (the rules applicable, differences of interpretation as regards the rules to be followed because of different financial controls and ACPCs, the margin for manoeuvre of each institution to carry out the tasks which have been assigned to it).

Evaluation of bids

10. Concerning external translation services, contracts are awarded on the basis of various criteria enabling the most advantageous bid in economic terms to be determined. In applying a value-for-money ratio, the Centre is convinced, through its experience in procuring external translation services, of the importance of the quality factor, which will enable, inter alia, a reduction in revision costs. Because of this, for the last calls for tenders for language services, the quality criteria was revised upwards (a minimum quality score of 60 % now being necessary in order for a bid to be considered of sufficient quality and accepted for the rest of the procedure).

For services other than translation services, the authorising authority may however base its decision to award contracts only on the basis of the lowest price.

11 to 13. The Centre recognises the importance of absolute clarity in the operational procedures of the evaluation committees. Constant efforts are being made to this end.

For services other than translation, the procedures have been clearly established. The committees are always made up of a minimum of three persons, at least one of whom does not belong to the department concerned. The committees are composed according to field of expertise. Thus, even though the decisions of the committees are always taken jointly, the expert's opinion is highlighted in specific areas.

Evaluation of external translation services

15. Concerning cooperation between the external translation services in the field of quality, an interinstitutional evaluation system project is underway. The difficulty of the texts to be translated is one of the points to be considered, among others, in this project. The cooperation recommended by the Court is already underway within the framework of the Interinstitutional Committee for the Evaluation of Quality (CIEQ), to whom the documents are sent for an opinion as soon as a quality problem arises in house.