Report on the financial statements of the European Training Foundation (ETF-Turin) for the financial year ended 31 December 1997, together with the Foundation's reply
Date: 1998-11-05
Institutions: European Court of Auditors
Subjects: European Training Foundation, financial control, financial year, management audit, report

C  406/38

EN

Official  Journal  of  the  European  Communities

28.12.98

on  the  financial  statements  of  the  European  Training  Foundation  (ETF  —  Turin)  for  the
financial  year  ended  31  December  1997,  together  with  the  Foundation’s  reply

REPORT

(98/C  406/07)

1.1. This  report  is  addressed  to  the  Governing  Board  of
the  European  Training  Foundation  in  conformity  with
Article  11(4),  of  Council  Regulation 
(EEC)  No
1360/90 (1).

MAIN  OBSERVATIONS  ON  THE  IMPLEMENTATION  OF
THE  BUDGET  OF  THE  EUROPEAN  TRAINING
FOUNDATION  FOR  THE  FINANCIAL  YEAR  ENDED  31
DECEMBER  1997

PHARE,  TACIS  and  TEMPUS  subsidies  not  included  in
the  budget

1.2. The Court has examined the financial statements of
the  European  Training  Foundation  for  the  financial  year
ended  31  December  1997.  In  accordance  with  Article
11(1),  of  Council  Regulation  (EEC)  No  1360/90,  the
budget  was  implemented  on  the  responsibility  of  the
Director. This responsibility included the drawing-up and
presentation  of  the  financial  statements (2)  in  accordance
with  the  internal  financial  provisions,  as  provided  for  in
Article 12 of Council Regulation (EEC) No 1360/90. The
Court  of  Auditors  is  required  under  Article  188c  of  the
Treaty establishing the European Community to examine
these  accounts.

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.

In 

the  context  of 

1.5.
the  PHARE  and  TACIS
programmes  and  for  TEMPUS,  the  Foundation  manages
the  funds  made  available  to  it  by  the  Commission.
Subsidies  amounting  to  a  significant  sum  (around  ECU
the
380  million 
Foundation’s budget, but in separate accounts. Moreover,
the  total  balance  (ECU  56,6  million  as  at  31  December
1997)  of  the  thirty-odd  bank  accounts  used  by  the
Foundation to manage these transactions is not shown in
the  financial  statements  of  the  Foundation.

in  1997)  are  not  recorded 

in 

The  Court  would  once  again  ask  the  Foundation (3)  to
include  the  transactions  relating  to  the  management  of
these  funds  in  its  own  accounts.

New  system 
payments

for 

the  procedures 

for 

implementing

1.6. The  use  of  the  new  SI  2  computer  system  has
improved  the  speed  and  efficiency  of  all  the  entries  for
commitments  and  payment  orders.

1.7. Nevertheless,  it  would  be  desirable  for  SI  2,  which
currently  only  covers  budgetary  management,  to  be
extended  to  include  the  general  accounts  as  soon  as
possible.

Inventory

(1)  OJ  L  131,  23.5.1990,  p.  4.
(2)  As required under Article 11(3) of Council Regulation (EEC)
No  1360/90,  the  detailed  accounts  for  all  the  Foundation’s
revenue  and  expenditure  for  the  financial  year  1997  were
drawn  up  on  31  March  1998  and  forwarded  to  the
Foundation’s  Governing  Board,  the  Commission  and  the
Court  of  Auditors.  These  accounts  were  received  by  the
Court  on  17  April  1998.  A  summarised  version  of  these
financial statements is presented in the tables attached to this
report.

1.8. During  its  verification  of  the  physical  existence  of
the  goods  shown  in  the  inventory,  the  Court  found  that
obsolete computer equipment (PCs, printers, etc.) with an
inventory value of around ECU 0,3 million was stored on
the  Foundation’s  premises.  The  Agency  should  sell  or
scrap  the  obsolete  equipment.

(3)  OJ  C  393,  29.12.1997,  p.  41.

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/39

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 5 November
1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

C  406/40

EN

Official  Journal  of  the  European  Communities

28.12.98

Table  1

Balance  sheet  for  the  financial  year  1997

Assets

1997

1996

Liabilities

1997

1996

(ECU  1 000)

Fixed  assets
Equipment  and  furniture
Supplies

1 892
13

1 905

1 562
16

1 578

Sub-total

Fixed  capital
Own  capital
Out-turn  to  be  carried  over

Sub-total

1 905
2 212

4 117

1 578
1 794

3 372

Current  assets
Sundry  accounts  receivable
Commission  subsidy  (1995)
Commission  subsidy  (1996)

10

10

12
543
431

986

Sub-total

Cash  accounts
Banks  -  demand  accounts
Imprest  account

4 459
1 860

6 319

6 088

6 088

Sub-total

Short-term  liabilities
Non-automatic  carry-overs
Commission  subsidy  1996
Automatic  carry-overs  of
appropriations
Payments  in  progress
Deductions  from  salaries
Sundry  accounts  payable
Accounting  officers’  allowances
Recovery  orders
Revenue  allocated

665
431
3 288

350
56
432
4
9
45

2 727

658
311
391
4
10
16

Sub-total

4 117

5 280

Total  assets

8 234

8 652

Total liabilities

8 234

8 652

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

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/41

Table  2

Revenue  and  expenditure  account  for  the  financial  year  1997

(ECU  1 000)

1997

1996

15 303
391
3
262

16 069
132
27
23

Total  revenue

15 959

16 251

Revenue
Subsidy  received  from  the  Commission
Bank  interest
Sundry  revenue
Exchange-rate  profits

Expenditure
Staff  expenditure  —  Title  I
Payments
Appropriations  carried  over

Buildings,  equipment  and  miscellaneous  administrative  expenditure  —
Title  II
Payments
Appropriations  carried  over

Operating  expenditure  —  Title  III
Payments
Appropriations  carried  over

Exchange-rate  losses

9 231
303

1 928
552

1 383
1 872

128

8 277
439

1 743
711

1 201
2 802

1 030

Total  expenditure

15 397

16 203

Out-turn  for  the  financial  year
Out-turn  carried  over  from  the  previous  year
Commission  repayments
1995  subsidy  cancelled
Appropriations  carried  over  from  the  previous  year  and  cancelled

562
1 794
0
− 543
399

48
1 566
− 184

364

Out-turn  to  be  carried  over

2 212

1 794

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

C  406/42

EN

Official  Journal  of  the  European  Communities

28.12.98

FOUNDATION’S  REPLY

PHARE,  TACIS  and  TEMPUS  subsidies  not  included  in
the  budget

New  system 
payments

for 

the  procedures 

for 

implementing

The  Court  renewed  its  request  previously  included  in  its
report on the 1996 accounts that all funds transferred by
the  Commission  to  the  Foundation  be  incorporated  into
the  Foundation’s  own  accounts.

On  27  October  1998  a  meeting  between  the  Court  of
Auditors,  the  Commission  (DG  XX,  DG  XXII)  and  the
Foundation  took  place.  Agreement  was  reached  on  the
inclusion of all monies handled by the Foundation in the
accounts. All amounts that are integrated in the accounts
of  the  Foundation  will  also  be  shown  in  the  annual
report. It was furthermore agreed that all amounts should
be  visible  in  the  budget  document.  While  the  subsidy  to
the  Foundation  will  be  subject  to  the  approval  of  the
Governing  Board,  all  further  amounts,  namely  those  in
context  with  technical  assistance  and  conventions  agreed
with  the  Commission,  will  be  shown  in  an  Annex  to  the
budget  document  for  information  and  thus  enhance
visibility and transparency for all those who are involved
in 
the
the  management,  control  and  audit  of 
Foundation.

The  Court  refers  to  the  improvements  brought  about  by
the  introduction  of  SI  2,  the  new  budgetary  system,  and
suggests  that  it  be  extended  to  all  general  accounting
issues.  The  Foundation  welcomes  the  positive  views  of
the  Court  and  agrees  with  the  Court’s  recommendations.
My staff have already started working towards this goal.
A  project  plan  and  specifications  have  already  been
drawn  up  and  the  computer  development  work 
is
underway.  Data  transfer  from  the  ledger  data  will  be
accessible.  It  is  planned  that  the  new  system  will  be  in
place  by  early  1999.

Inventory

The  Court  addressed  the  question  of  obsolete  computer
and  other  equipment.  A  procedure  was  agreed  between
the  Foundation  and  Financial  Control.  In  compliance
with  this  a  non-profit  making  organisation  was  selected
to  re-employ  the  equipment.  The  equipment  will  be
handed  over  to  the  Organisation  in  the  first  week  of
November  and  consequently  the 
inventory  will  be
adjusted  at  that  time.