Report on the financial statements of the Translation Centre for Bodies of the European Union (TCBEU- Luxembourg) for the financial year ended 31 December 1997 together with the Centre's reply
Date: 1998-10-29
Institutions: European Court of Auditors
Subjects: Community body, financial control, financial year, management audit, report, translation

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/33

on  the  financial  statements  of  the  Translation  Centre  for  Bodies  of  the  European  Union
(TCBEU  —  Luxembourg)  for  the  financial  year  ended  31  December  1997  together  with  the
Centre’s  reply

REPORT

(98/C  406/06)

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

MAIN  OBSERVATIONS  ON  THE  IMPLEMENTATION  OF
THE  BUDGET  OF  THE  TRANSLATION  CENTRE  FOR
BODIES  OF  THE  EUROPEAN  UNION  FOR  THE
FINANCIAL  YEAR  ENDED  31  DECEMBER  1997

1.2. The Court has examined the financial statements of
the Translation Centre for Bodies of the European Union
for  the  financial  year  ended  31  December  1997.  In
accordance  with  Article  14(1),  of  Council  Regulation
(EC)  No  2965/94,  the  budget  was  implemented  on  the
responsibility of the Director. This responsibility included
the  drawing-up  and  presentation  of 
financial
statements (2)  in  accordance  with  the  internal  financial
provisions,  as  provided  for  in  Article  15  of  Council
Regulation  (EC)  No  2965/94.  The  Court  of  Auditors  is
required under Article 188c of the Treaty establishing the
European  Community  to  examine  these  accounts.

the 

1.3. The  Court  performed  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  carried  out
such  tests  of  the  accounting  records  and  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.

1.4. This  examination  has  enabled  the  Court  to  obtain
reasonable  assurance  that  the  annual  accounts  for  the
financial  year  which  ended  on  31  December  1997  are
reliable  and  that  the  underlying  transactions,  taken  as  a
whole,  are  legal  and  regular.

(1)  OJ  L  314,  7.12.1994,  p.  1.
(2)  As  required  under  Article  14(3),  of  Council  Regulation  (EC)
No  2965/94,  the  accounts  for  all  the  Centre’s  revenue  and
expenditure for the financial year 1997 were drawn up on 25
February  1998  and  forwarded  to  the  Centre’s  Management
Board,  the  Commission  and  the  Court  of  Auditors.  These
accounts  were  received  by  the  Court  on  3  March  1998.  A
summarised version of these financial statements is presented
in  the  tables  attached  to  this  report.

General  and  budgetary  accounts

1.5. Although  the  Centre  is  in  its  third  financial  year
(including two full years), its budgetary accounts are still
kept  by  means  of  a  spreadsheet  rather  than  appropriate
accounting  software.  The  use  of  a  spreadsheet  had
already  been  criticised  by  the  Court  in  its  Report
concerning  the  previous  financial  years (3).

1.6. The  Centre  should  set  up  a  system  of  analytical
accounts  in  order  to  be  able  to  establish  the  real  cost  of
the  services  that  it  provides  to  its  customers.

Agreements  with  the  Commission

In  1996  and  1997, 

the  Centre  concluded
1.7.
agreements  with  the  Commission  for  translations  that
should normally have been carried out by the Centre but
were  entrusted  to  the  Commission’s  translation  service.
The cost, to the Centre’s budget, of the services provided
in  this  context  amounted  to  ECU  0,4  million  for  1996
and ECU 0,2 million for 1997 (this amount includes ECU
0,06  million  for  work  other  than  translation,  such  as
terminological  harmonisation  and  standardisation).

1.8. Under  the  past  agreements,  invoicing  was  based  on
a different criterion from that applied when checking the
work  carried  out  (days  rather  than  pages).  This  prevents
the  Court  from  being  able  to  express  an  opinion  on
whether  the  amounts  shown  are  justified.  Moreover,  it
was  not  possible  to  explain  the  differences  in  cost  price
between  a  page  translated  in  1996  (ECU  36  per  page)
and  a  page  translated  in  1997  (ECU  82  per  page).  The

(3)  OJ  C  393,  29.12.1997,  p.  47.

C  406/34

EN

Official  Journal  of  the  European  Communities

28.12.98

supporting documents for the ECU 0,06 million spent on
terminological harmonisation and standardisation are not
satisfactory.

Budget

(ECU  0,89  million)  of 

the
1.9. Only  58 % 
appropriations  automatically  carried  over  from  the
financial  year  1996  were  utilised.  The  consequently  high
cancellation  rate  was  due  to  the  fact  that  ECU  0,65
million  of  the  carry-overs  that  had  been  made  did  not
correspond  to  any  specific  commitments.

1.10. For  1997,  payments  amounted  to  only  57,1 %  of
the  appropriations  for  the  financial  year  (i.e.  ECU  9,92
appropriations  were
these 
million);  30,3 %  of 
automatically carried over to the financial year 1998 and
12,6 %  were  cancelled.

Implementing  procedures  for  the  Financial  Regulation

1.12. When  the  Court  carried  out  its  audit  (in  March
1998),  the  Centre  had  still  not  adopted  the  procedures
for  implementing  its  Financial  Regulation,  which  itself
dates  back  to  September  1996.

Headquarters

1.13. Since  April  1997,  the  Centre  has  occupied  offices
made available by the Luxembourg Government. There is
still  no  written  agreement  specifying  the  conditions  for
the  use  of  these  premises.

Balance  of  the  financial  year

1.11. Article  13  of  the  Centre’s  Financial  Regulation
provides  for  the  budget  to  be  published  in  the  Official
Journal  of  the  European  Communities.  This  was  not
done.

1.14. Contrary  to  the  provisions  of  Article  32  of  the
Financial Regulation applicable to the general budget, the
Centre  has  not  entered  the  balance  for  each  of  the
previous  years  in  its  subsequent  budgets.

This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  the  Court  meeting  of
29 October  1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/35

Table  1

Balance  sheet  for  the  financial  years  1996  and  1997

Assets

1997

1996

Liabilities

1997

1996

(ECU  1 000)

Fixed  capital
Own  capital
Net  result

275
2 666

2  941

17
464

481

Sub-total

Fixed  assets
Equipment  and  furniture
Computer  equipment
Intangible  fixed  assets

Current  assets
Contributions  from  bodies
Sundry  accounts  receivable

71
156
48

275

693

693

9

8

17

259
7

266

Sub-total

Sub-total

Cash  accounts
Bank  —  demand  deposits
Imprest  account

5 915
2

5 917

1 894
109

2 003

Sub-total

Short-term  liabilities
Automatic carry-overs
Sundry  accounts  payable
Net  contributions  from  bodies
Appropriations  for  re-use

Sub-total

3 007
241
693
3

3 944

1 543
3
259

1 805

Total  assets

6 885

2 286

Total liabilities

6 885

2 286

Source:  Prepared  by  the  Court  of  Auditors  on  the  basis  of  the  Centre’s  data.

C  406/36

EN

Official  Journal  of  the  European  Communities

28.12.98

Table  2

Balance  for  the  financial  years  1996  and  1997

Revenue
Commission  subsidy
Sundry  revenue
Own  revenue

Expenditure
Staff  —  Title  I
Payments
Appropriations  carried  forward
Buildings,  equipment,  etc.  —  Title  II
Payments
Appropriations  carried  forward

(ECU  1 000)

1997

1996

300
118
9 809

Total  revenue

10 227

5 217
2 171

441
836

90
2 703

2 793

1 155
905

88
638

Total  expenditure

8 665

2 786

Out-turn  for  the  financial  year
Out-turn  carried  over  from  previous  financial  year
Appropriations  carried  over  and  cancelled
Exchange-rate  differences

1  562
464
649
(9)

Balance  for  the  financial  year

2 666

7
334
133
(10)

464

Source:  Prepared  by  the  Court  of  Auditors  on  the  basis  of  the  Centre’s  data.

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/37

REPLY  OF  THE  TRANSLATION  CENTRE

General  and  budgetary  accounts

1.5. As  stated  in  its  reply  to  the  report  on  the  previous
financial  years,  the  Translation  Centre  has  always
considered the software it uses for its budgetary accounts
to be unsuitable for its needs. Together with a number of
other  agencies,  the  Centre  has  drawn  up  an  agreement
which  provides  for  a  coordination  unit  responsible  for
the  installation  of  and  support  for  SI  2.  The  competent
authorities  have  approved  this  agreement.

With a view to speeding up this project as far as possible,
the Centre carried out a study on the introduction of SI 2
in  June  this  year.  It  expects  to  have  the  test  version  in
place  in  the  first  week  of  November.

1.6. The  Centre 
is  fully  aware  of  the  overriding
importance of having an effective cost-accounting system.
It  intends  to  supplement  SI  2  by  integrating  modules  for
the  general  and  analytical  accounts.  During  1998,  the
Centre  used  Excel  for  its  analytical  calculations.

Agreements  with  the  Commission

1.8. The  decision  to  base  invoicing  on  days  was  the
Commission’s,  given  that  the  services  it  provides  to  the
Centre  consist  not  only  in  the  translation  of  documents
but  also  in  terminology  work,  standardisation  assistance,
the  use  of  databases,  etc.

The  Centre  will  try  to  come  to  an  agreement  with  the
Commission  to  have  more  detailed  documentation  for
future 
amounts
corresponding  to  these  services  are  decreasing  (ECU  0,4
million  for  1996,  ECU  0,2  million  for  1997  and  a
forecast  ECU  0,45  million  for  1998).

accounting, 

though 

even 

the 

calculate  the  value  of  translation  orders  outstanding  at
the  end  of  1997.  To  resolve  this  problem  the  Centre  has
this  year  set  up  a  translations  follow-up  database  and
begun to introduce SI 2 so that it will have the necessary
tools  for  accurate  calculation  when  the  accounts  are
closed  at  year-end.

1.11. The relatively high cost of publishing the budget in
the  Official  Journal  of  the  European  Communities  has
brought the Centre, together with four other agencies, to
negotiate  an  agreement  with  the  Publications  Office  to
publish  their  budgets  jointly.  This  is  currently  being
negotiated 
the  1998  budget.  The  European
Parliament,  for  its  part,  proposes  arranging  for  the
agencies’  budgets  to  be  published  on  the  Internet,  with
advance  notice  in  the  Offical  Journal  of  the  European
Communities  giving  details  of  the  respective  websites.

for 

Implementing  procedures  for  the  Financial  Regulation

implementing  procedures 

1.12. The  draft 
the
Financial  Regulation  have  been  submitted  for  opinion  to
the Financial Controller. If approved, they will be on the
agenda  of  the  Management  Board  meeting,  on  26
October  1998,  for  adoption.

for 

Headquarters

1.13. The  Centre  is  finalising  a  draft  agreement  on  its
headquarters  and  security  arrangements,  which  will  be
submitted  to  the  Luxembourg  authorities.

Budget

Balance  of  the  financial  year

1.9  and  1.10.
In  view  of  the  huge  volume  of  work  sent
limitations  of
out  to  freelance  translators  and  the 
managing  the  accounts  in  Excel  and  the  translations
follow-up  system,  it  was  by  no  means  a  simple  task  to

1.14. There  is  no  provision  in  its  Financial  Regulation
for the Centre to enter the balances for the previous years
in  its  subsequent  budgets.  The  Centre  will  be  reviewing
its  Financial  Regulation  to  address  this  problem.