Report

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

(2002/C 326/06)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the Council and the European Parliament in accordance with Article 12 of Council Regulation (EEC) No 337/75(1), as amended by Council Regulation (EEC) No 1946/93(2).

2. The Court has examined the financial statements of the European Centre for the Development of Vocational Training for the financial year ended 31 December 2001. In accordance with Article 18(1) of Council Regulation (EEC) No 1416/76(3), as amended by Council Regulation (EEC) No 1948/93(4), the Centre's budget was implemented on the responsibility of its management board. This responsibility includes the drawing-up and presentation of the financial statements(5), in accordance with the internal financial provisions provided for in Articles 65, 67 and 68 of Council Regulation (EEC) No 1948/93, amending Council Regulation (EEC) No 1416/76. 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 auditing standards and policies. 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 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 2001 are reliable and that the underlying transactions, taken as a whole, are legal and regular.

MAIN OBSERVATIONS

Budgetary implementation

5. Table 1(6) shows the implementation of the appropriations for the financial year 2001 and the appropriations carried over from the previous financial year.

6. Final appropriations for the financial year totalled 13,5 million euro, almost all of which were committed. Payments in respect of the appropriations of the financial year amounted to 10,6 million euro; 2,8 million euro were carried over to the following financial year. The appropriations carried over to 2002 concerned mainly operating appropriations (Title III), amounting to 2,2 million euro, i.e. over 40 % of the appropriations committed. The Centre should pursue its efforts to increase the quality and monitoring of the planning of its activities.

7. Appropriations carried over from 2000 to the financial year 2001 amounted to 2,5 million euro, 2,3 million of which were disbursed.

8. The accounting system's possibilities regarding electronic signatures should be fully exploited (electronic signatures should be an option open not only to the Accounting Officer and administrative staff but also to the Authorising Officers) in order to uphold the principle of the separation of duties.

Financial statements

9. The revenue and expenditure account and 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.

10. The Centre does not depreciate its fixed assets. It should apply the valuation and depreciation rules adopted by the Commission(7) so that the book values faithfully reflect the real value of the goods which form part of its assets.

Application of the financial provisions

11. The Centre has an imprest account with a ceiling of 2000000 euro. This figure is still too high. Moreover, there is no limit to the amount of individual payments that may be made.

12. The Centre should continue its efforts to apply purchasing procedures more strictly as has already been pointed out on several occasions in previous reports(8). Thus two contracts(9) (for a global amount of 64600 euro) were concluded directly with the suppliers of the services without observing the relevant rules.

The Centre's mandate and resources

13. An analysis was carried out of the consistency between the tasks assigned to the Centre and the organisation of its financial and human resources and its activities as shown in the budget, its programme of activities and its organisation chart in order to check if it was appropriate and transparent enough. Article 2 of Regulation (EEC) No 337/75 assigns five tasks to the Centre: to compile documentation on systems and developments in the area of vocational training; to contribute to the development and coordination of research in these fields; to disseminate all useful documentation and information; to encourage a concerted approach to vocational training problems and, in particular, to achieve the mutual recognition of certificates and other documents attesting completion of vocational training and to provide a forum for all those concerned. Table 4 summarises the results of this analysis.

14. In order to carry out its tasks, the Centre receives a subsidy from the Commission which forms the bulk of its budgetary revenue. This revenue is intended to cover its administrative expenditure and operating expenditure arising from its programme of activities. The headings over the budgetary items relating to operating expenditure do not, however, correspond to those of the tasks assigned to the Centre. Moreover, the activity report does not clearly indicate the link between the operating activities described and the Centre's tasks. This absence of link with the tasks may also be seen in the organisation chart of staff assigned to operating activities.

15. These inconsistencies between, on the one hand, the tasks laid down by the Centre's Regulation and, on the other hand, the distribution of its financial resources, the organisation of its activities and the allocation of its human resources result in the FIBUS system not being able to establish a link between the Centre's tasks and the implementation of its programme of activities as the latter is reflected in the implementation of its budget.

16. The Centre should take care to ensure greater consistency between the tasks assigned to it by the basic legislation and the distribution of the financial and human resources granted to it. The practical organisation of its activities should also reflect the Centre's objectives more closely. In order to make its activity more transparent and to be able to audit the effectiveness of its management, a recognisable link between the Centre's objectives and the organisation and the implementation of its activities should be established.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 10 October 2002.

For the Court of Auditors

Juan Manuel Fabra Vallés

President

(1) OJ L 39, 13.2.1975, p. 1.

(2) OJ L 181, 23.7.1993, p. 11.

(3) OJ L 164, 24.6.1976, p. 1.

(4) OJ L 181, 23.7.1993, p. 15.

(5) As required under Article 1 of Council Regulation (EEC) No 1948/93, amending Council Regulation (EEC) No 1416/76, the accounts for all the Centre's revenue and expenditure for the financial year 2001 were drawn up on 29 March 2002 and forwarded to the Commission and the Court of Auditors. These accounts were received by the Court on 4 April 2002. A summarised version of these financial statements is published in the tables annexed to this report.

(6) 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.

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

(8) See paragraph 11 of the report for the financial year 2000 (OJ C 372, 28.12.2001).

(9) Contracts 2001/055, (43000 euro) and 2000/300 (21600 euro).

Table 1

Implemenation of the budget for the financial year 2001NB:

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

Source:

Centre data - These tables summarise the data supplied 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:

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

Source:

European Centre for the Development of Vocational Training.

Table 3

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

Any discrepancies in totals are due tot he effects of rounding.

Source:

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

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Table 4

Objectives

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The Centre's replies

4. We note that the Court has obtained 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.

6. The Centre will follow the Court's suggestions to reinforce the quality and follow-up to the programming of activities.

8. Regarding electronic signatures, the Centre's IT section is currently undertaking the relevant training to the staff concerned.

Concerning the separation of tasks, this is currently ensured as, at present, the hard copy "paper" document has ultimate validity. Whilst it was the case, in 2001, that not all authorising officers signed in FIBUS, this is now the practice.

10. The Centre will adapt its provisions while adapting the new Financial Regulation within the framework of the new provisions for decentralised bodies which are currently being adopted.

11. At the meeting of the Management Board on 14 and 15 November 2002, the Centre will table a new draft decision on the creation of an imprest account and limiting its ceiling to EUR 100000, which corresponds to expenditure in the year 2001.

12. Concerning contract 2001/0055 (EUR 43000), a restricted call for tenders was, in fact, carried out albeit electronically (e-mail). Of the five potential tenderers contacted, only one submitted an offer which was accepted.

The Centre's contract management section has already informed the horizontal unit concerned that such practices (market-sounding by e-mail only) are contrary to existing rules and must not be repeated. The Centre will study opportunities for using electronic tools for market procedures while fully respecting the financial provisions in this matter.

Concerning contract 2001/0063 (EUR 21600), it is correct that no market sounding was performed.

This fact, and the reasons for doing so, were explicitly stated in the initial ad hoc note to Financial Control requesting commitment and draft-contract approval. Further clarification was subsequently requested and supplied. The Centre has concluded that a better programming of work would help to avoid urgencies and to respect the rules.

13 to 16. The Court's analysis shows wide convergence with the activities described in the Centre's annual report.

In line with the action plan approved by its Management Board as follow-up to the external evaluation, the Centre introduced, as of early 2002, a new organisational structure which is based on its main activities. The Centre has also set up a working group on activity-based budgeting which will refine its activity-based-budget approach for 2003.

The 2003 work programme will be the first one within the framework of the new 2003 to 2006 medium-term priorities. That work programme will give clear indications of activities and outputs for the working areas based on the Centre's basic tasks.

Also in 2003, the Centre will, via an acti-track system, ensure maximum transparency of the time spent on specific activities.

The Centre expresses its gratitude for the proactive support of the Court in this approach.