Report

on the financial statements of the Community Plant Variety Office concerning the financial year 2001, together with the Office's replies

(2002/C 326/11)

CONTENTS

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THE COURT'S OPINION

1. This report is addressed to the Management Board of the Community Plant Variety Office (hereafter "the Office"), in accordance with Article 111(2) of Council Regulation (EC) No 2100/94(1).

2. The Court has examined the Office's financial statements for the financial year ended 31 December 2001. In accordance with Article 110 of Council Regulation (EC) No 2100/94, the Office's budget was implemented on the responsibility of its President. This responsibility includes the drawing-up and presentation of the financial statements(2) in accordance with the internal financial provisions adopted on the basis of Article 112 of Council Regulation (EC) No 2100/94. The Court of Auditors is required under Article 248 of the Treaty establishing the European Community to examine 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 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. 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 the appropriations for the financial year 2001 and of the appropriations carried over from the previous financial year is set out in Table 1(3).

6. The final appropriations for the financial year amounted to 8,6 million euro and the commitments totalled 8 million euro. 3,8 million euro were committed out of the operating appropriations (Title III), which amounted to 4,1 million euro. Payments made against the appropriations for the financial year amounted to 4,4 million euro, of which 3 million euro were carried over to the following financial year and a sum of 1,1 million euro had to be cancelled. Only 26 % of the operating appropriations committed were paid out during the financial year.

7. The appropriations carried over to 2002 amount to 3 million euro. These relate mainly to operating appropriations (2,9 million euro), the amount of which that is carried over increases from year to year(4). The Court reiterates the recommendation it made in its 2000 Annual Report(5) concerning checking whether the Financial Regulation applicable to the general budget is suited to the Office's specific characteristics.

Financial statements

8. Tables 2 and 3 set out in summary form the revenue and expenditure account and balance sheet published by the Office in its Activity Report for the financial year 2001. The balance sheet as at 31 December 2001 shows a balance of 11028828 euro for the financial year. This comprises the reserve fund provided for in Article 6(d.2) of the Office's financial regulation. The reserve fund sums were correctly entered in the "Legal Reserve" account in the Office's general accounts, but should be shown in the same account in the balance sheet.

9. The general accounting system used by the Office up until the end of 2001 was inadequate and did not meet management needs. A new system was set up at the beginning of 2002. The accounts were opened in the new accounting system on the basis of the balances contained in the general accounts alone, because the subsidiary accounts could not be used for this purpose. For example, the subsidiary account balances for "Customers" and "Suppliers" do not provide a breakdown of the balances that are shown in the balance sheet. Particular attention should be paid to identifying the balances for customers and suppliers, in respect of which the previous system largely suffered from serious shortcomings.

10. In its Annual Report on the Office's financial statements concerning the financial year 2000(6), the Court highlighted shortcomings in the inventory system. In 2001 the Office began applying the depreciation rules adopted by the Commission in December 2000(7). Coordination between the department responsible for keeping the inventory and the accounts department should be improved, so as to avoid discrepancies between the values shown in the balance sheet and those shown in the inventory lists.

11. Most of the Office's transactions (crediting of fees and debiting of expenditure) are effected through one bank account. The amounts placed in reserve are also held in this current account, which receives interest at the European Central Bank refinancing rate, less 0,25 %. Given that the average monthly balances in this account amounted to over 11 million euro in 2001, the Office should review its cash management with a view to increasing the yield on its funds. In the same spirit, it should consider closing an additional bank account it holds which continues to be virtually unused(8).

12. The Office maintains an imprest account, as provided for in Article 45 of its financial regulation and in Article 71 of the implementing rules. An audit of this account(9) revealed that the balance exceeded the 75000 euro ceiling fixed by the decision of 10 May 2001 concerning the establishment of the Office. Furthermore, some expenditure was still not backed up by supporting documents. The Accounting Officer should systematically carry out spot checks on the imprest account, in accordance with Article 79 of the detailed rules for the implementation of the Office's financial regulation.

Application of financial provisions

13. The Office's headquarters have been renovated and refitted. The work began in 1999 and was physically completed in September 2000. Part of the electrical installation work was not covered by a commitment(10) and the appropriations that remained available under the budget heading concerned(11) were insufficient to meet the obligation entered into by the Office.

14. The Office's Management Board met on 20 and 21 September 2001 in Lisbon. The commitment(12) in respect of the reimbursement of mission expenses and subsistence allowances to members of the Management Board was entered into on 23 October 2001, i.e. a month after the meeting had taken place, on the basis of expenditure already incurred. This practice does not comply with the provisions of the Financial Regulation and could prove particularly critical at the end of the financial year.

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 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 2001 were drawn up on 5 April 2002 and forwarded to the Office's Management Board, the Commission and the Court of Auditors. The Court received these accounts on 10 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 calculated 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) 1,7 million euro in 2000 and 1,5 million euro in 1999.

(5) OJ C 372, 28.12.2001, paragraph 8.

(6) OJ C 372, 28.12.2001, paragraph 10.

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

(8) The account shows an average balance of 970000 euro and was used for only about a dozen transactions in 2001.

(9) Audit carried out in October 2001.

(10) Uncovered amount: 11933 euro.

(11) Budget heading 2040.

(12) Commitment No CPV 3157.

Table 1

Implementation of the budget for the financial year 2001NB:

The totals may contain discrepancies due to the effect of rounding.

Source:

The Office's data. These tables summarise the data provided by the Office 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 contain discrepancies due to the effects of rounding.

Source:

The Office's data. These tables summarise the data provided by the Office in its own financial statements.

Table 3

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

The total may contain discepancies due to the effects of rounding.

Source:

The Office's data. These tables summarise the data provided by the Office in its own financial statements.

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The Office's replies

5 and 6. No observations made.

7. The Office's Financial Regulation must be amended in order to bring it into line with the amendments made to the new Commission regulation recently adopted by the Council. The Office will take advantage of this to introduce the possibility of using differentiated appropriations in order to better manage carryovers of operating appropriations.

8. The Office takes note of this observation. It will be taken into account from the next publication of the annual accounts.

9. The previous general accounting system was replaced from the beginning of the new financial year 2002 by a more reliable product, the EXACT software, which is also used by other decentralised agencies and offices. An in-depth analysis of customers' and suppliers' accounts was undertaken for the past three years' entries. The Court will be informed later of the results of that analysis.

10. The Office takes good note of the Court's observation and, as a result, will change its working methods.

11. The Office is considering reusing the account which the Court suggested be examined for possible closure, given that it currently offers more favourable conditions than the other account referred to by the Court.

12. Following the decision of 10 May 2001 amending the ceiling set for imprest transactions, several months were needed to settle the amount owing to delays in administrative procedures.

13. The Office agrees with the Court's observations set out in this paragraph.

14. It is very difficult, as far as the experts or members of the Management Board are concerned, to calculate accurately the exact number of participants and their travel costs prior to the meeting. This being the case, the Office will henceforth put in place a system of flat-rate or provisional commitments based on data gathered in the past (estimated number of participants, calculation of daily subsistence allowances and estimated travel costs) with a safety margin of 5 % to 10 %. Any necessary changes will be made when the final statement of expenses is drawn up following the meetings.