Report on the financial statements of the Community Plant Variety Office (CPVO-Angers) for the financial year ended 31 December 1997, together with the Office's reply
Date: 1998-11-05
Institutions: European Court of Auditors
Subjects: Community body, crop production, financial control, financial year, management audit, report

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/49

on  the  financial  statements  of  the  Community  Plant  Variety  Office  (CPVO  —  Angers)  for  the
financial  year  ended  31  December  1997,  together  with  the  Office’s  reply

REPORT

(98/C  406/09)

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

MAIN  OBSERVATIONS  ON  THE  IMPLEMENTATION  OF
THE  BUDGET  OF  THE  COMMUNITY  PLANT  VARIETY
OFFICE  FOR  THE  FINANCIAL  YEAR  ENDED  31
DECEMBER  1997

the  responsibility  of 

1.2. The Court has examined the financial statements of
the Community Plant Variety Office for the financial year
ended 31 December 1997. In accordance with Article 110
of  Council  Regulation  (EC)  No  2100/94,  the  budget  was
implemented  on 
the  Office’s
President.  This  responsibility  included  the  drawing-up
and  presentation  of 
in
accordance  with  the  internal  financial  provisions,  as
provided  for  in  Article  112  of  Council  Regulation  (EC)
No  2100/94.  The  Court  of  Auditors  is  required  under
Article  188c  of  the  Treaty  establishing  the  European
Community  to  examine  these  accounts.

financial  statements (2) 

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.

Budgetary  and  general  accounts

1.5. The delays in the monitoring of the accounts, which
had already been noted last year, have still not been dealt
with.

1.6. Throughout  the  year,  the  general  accounts  were
several months behind. Reconciliation with the budgetary
accounts  could  only  be  carried  out  well  after  the  latter
had  been  closed.

1.7. All  the  revenue  for  the  financial  year  was  included
under  one  single  recovery  order  at  the  end  of  the
financial year.

Technical  activities

1.8. The delay in establishing the procedure for verifying
the eligibility of variety designations and, in particular, in
drawing  up  the  contracts  with  the  national  offices
concerned  prevented  the  issuing  of  several  hundred
additional  protection  certificates  in  1997.

1.9. The  Management  Board  has  still  not  issued  a
Decision  concerning  the  factors  to  be  taken 
into
consideration  for  the  calculation  of  the  costs  of  the
technical  examinations  and  the  method  for  calculating
them  (to  be  used  as  the  basis  for  determining  the
remuneration  of 
the
examinations  in  question).

the  offices 

responsible 

for 

Other  observations

(1)  OJ  L  227,  1.9.1994,  p.  27.
(2)  As required under Article 111(2), of Council Regulation (EC)
No  2100/94,  the  accounts  for  all  the  Office’s  revenue  and
expenditure for the financial year 1997 were drawn up on 27
March  1998  and  forwarded  to  the  Office’s  Management
Board,  the  Commission  and  the  Court  of  Auditors.  These
accounts  were  received  by  the  Court  on  31  March  1998.  A
summarised  version  of  these  accounts  is  presented  in  the
tables  attached  to  this  report.

1.10. The  Office’s  budget  has  not  been  published  in  the
Official  Journal  of  the  European  Communities.

1.11. The  procedures  for  the  implementation  of  the
Office’s  Financial  Regulation  have  not  yet  been  adopted.

1.12. The  Annual  Report  concerning  the  financial  year
1996  has  still  not  been  published.

C  406/50

EN

Official  Journal  of  the  European  Communities

28.12.98

Separation  of  duties

1.13. Although  there  have  been 
improvements,  the
principle  of  the  separation  of  the  duties  of  authorising
officer  and  accounting  officer  is  still  not  fully  complied

with.  The  accounting  officer  continues  to  help  with
drawing  up  or  making  prior  checks  on  budgetary
documents  (commitment  proposals,  payment  orders,
recovery  orders,  the  regularisation  of  imprests).

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

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/51

Table  1

Balance  sheet  as  at  31  December  1997

Assets

1997

1996

Liabilities

1997

1996

(ECU  1 000)

Fixed  assets
Equipment  and  furniture
Computer  equipment
Intangible  fixed  assets

Sub-total

Current  assets
VAT
Sundry  accounts  receivable

Administrative  expenditure  —  Title

II

40
68
6

114

41
5

46

15
35
2

52

0
20

20

Cash  accounts
Banks  -  demand  accounts
Imprest  account

6 068
150

6 218

4 498
150

4 648

Sub-total

Fixed  capital
Own  capital
Balance  for  the  financial  year

Sub-total

114
5 131

5 245

52
3 885

3 937

Short-term  liabilities
Automatic carry-overs
Applicants
Sundry  accounts  payable
VAT

916
132
43
41

Sub-total

1 133

472
283
28
0

783

Total  assets

6 378

4 720

Total liabilities

6 378

4 720

NB:  The amounts are rounded up/down to the nearest thousand and always represent the rounding-up/down of each exact figure and not the sum of the

roundings-up/down.

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

C  406/52

EN

Official  Journal  of  the  European  Communities

28.12.98

Table  2

Revenue  and  expenditure  account  for  the  financial  year  1997

(ECU  1 000)

1997

1996

Revenue
Subsidy  received  from  the  Commission
Charges  collected (1)
Bank  interest

Expenditure
Staff  expenditure  —  Title  I
Payments
Appropriations  carried  forward

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

Operating  expenditure  —  Title  III
Payments
Appropriations  carried  forward

Miscellaneous  expenditure  —  Title  X  (Repayment  1995  Commission
subsidy)
Payments

Miscellaneous  expenditure  outside  the  budget
Exchange-rate  losses

0
3 959
206

Total  revenue

4 165

0
1 825
197

2 022

507
9

195
21

42
442

0

8

1 392
49

374
80

147
787

300

12

Total  expenditure

3 142

1 224

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

1  022
3  885
223

798
3  065
22

Out-turn  to  be  carried  over

5 131

3 885

(1)  This  total  includes  an  amount  of  ECU  78 800  collected  in  1998.
NB: 

The  amounts  are  rounded  up/down  to  the  nearest  thousand  and  always  represent  the  rounding-up/down  of  each
exact  figure  and  not  the  sum  of  the  roundings-up/down.

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

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/53

REPLY  OF  THE  OFFICE

1.  Delay  in  the  monitoring  of  the  accounts

Various  factors  were  responsible  for  the  delays  in  the
monitoring  of  the  accounts  in  1997,  for  example:  the
unsettling  nature  of  the  structural  changes  within  the
Office; the successive changes in location and the ensuing
staff  turnover;  the  absence  of  accounting  software  (for
the  general  accounts  and  budget  accounts)  matching
Community  requirements  (double-entry  book-keeping);
the 
turnover  of  staff;
Community  procedures  because  of  the  complexity  of  the
systems  for  managing  fees;  and  the  rapid  expansion  of
the  Community  plant  variety  protection  system,  etc.

limited  number  and  high 

(budget 

Both  the  general  accounts  and  the  budget  accounts  are
now  monitored.  Partially-automated  data  entry  systems
have  been  developed  for  the  general  accounts  and  all  the
necessary measures have been taken to introduce the S1 2
system 
1999.
Furthermore,  steps  are  being  taken  to  link,  via  the
computer,  the  accounting  and  the  programme  for
managing  plant  variety  rights  (PVR),  to  recruit  an
assistant  accounting  officer  and  to  put  in  place  a  system
of  monthly  income  recovery  orders,  and  accounting
reconciliations  are  now  undertaken  on  a  regular  basis.

accounting) 

January 

in 

2.  Delays  linked  to  technical  activities

(a)  Contracts  with  the  national  offices

The  need  to  draw  up  contracts  governing  the
procedure  for  verifying  the  eligibility  of  variety
designations  was  discussed  with  the  national  offices
concerned. They all approved the content of the draft
versions  which  were  submitted.  The  final  version  of
these  contracts  has  been  translated  so  that  they  can
soon be signed by the offices concerned. In any event,
the offices have already begun to draw up verification
procedures  based  on  the  draft  contracts.  The  backlog
which  had  initially  occurred  at  this  level  as  regards
the  granting  of  rights  has  now  been  absorbed.

(b) Calculation  of  the  verification  costs

At  its  meeting  in  April  1998,  and  based  on  the
proposal  tabled  by  the  Office,  the  Administrative
Council  agreed  to  appoint  an  independent  financial
expert,  following  an  invitation  to  tender,  to  evaluate

the  method  used  to  calculate  the  costs  of  technical
examinations  carried  out  by  the  national  offices
concerned,  a  method  largely  formulated  at  the  outset
by  the  Office  itself.

At  this  meeting,  the  Office’s  Administrative  Council
extended,  until  December  1999,  the  validity  of  its
agreement  on  the  ‘in-out’  principle  whereby  the
amounts  paid  to  examination  offices  for  any  work
undertaken  are  based  on  the  examination  fees
received  by  the  Office.

3.  Other  failures  to  publish

(a)  The  Office’s  budget

The  Office’s  amending  budget  for  1998,  adopted  by
the  Administrative  Council  at 
its  extraordinary
meeting  on  10  June  1998,  will  be  published  by  the
Office  for  Official  Publications  of  the  European
Communities in Luxembourg at the end of the second
half  of  1998.

Indeed,  with  a  view  to  reducing  the  costs  of
publication  in  the  Official  Journal  of  the  European
Communities, 
(Bilbao,  Lisbon,
Luxembourg,  Angers)  have  agreed  to  publish  their
budgets  in  a  joint  publication,  coordinated  by  the
Translation  Centre  for  the  Bodies  of  the  European
Union.

several  agencies 

The  publication  containing  the  amending  budget  for
1998,  will  also  include:

—  the  1996  budget;

—  the  1997  budget;

—  the  preliminary  budget  for  1998;

—  the  amending  budget  for  1998.

(b) The  procedures 

for 

implementing 

the  Financial

Regulation

Work  is  currently  underway  on  the  draft  Regulation
laying down Detailed Rules for the Implementation of
the Financial Regulation of the Office. Because of the
specific  nature  of  the  Office,  and  hence  of  its
Financial  Regulation,  great  care  is  needed  in  drawing
up  this  draft  Regulation,  and  the  experience  already
gained  by  other  self-financing  agencies  operating
along  similar  lines  to  the  Office  (Alicante,  London)
must  be  taken  into  account.

The  draft  should  be  presented  to  the  Office’s
Administrative  Council  at  its  meeting  in  December
1998.

C  406/54

EN

Official  Journal  of  the  European  Communities

28.12.98

(c)  Annual  Report  for  1996

to 

the  Office 
the  European  Communities 

for  1996  has  been
The  draft  Annual  Report 
for  Official
translated  and  sent 
for
Publications  of 
publication  in  the  second  half  of  1998.  It  should  be
noted  that,  in  contrast  to  the  1995  Annual  Report,
the  Report  for  1996  includes  a  sizeable  technical
annex.

comply  fully  with  the  principle  of  separation  of  duties.
Proposals  for  expenditure  commitments,  payment  orders
and  recovery  orders  (except  for  the  fees)  are  generally
prepared 
financial
administrators.

for  electronic  signature  by 

the 

regard 

With 
imprest
administrator  and  the  assistant  imprest  administrator
draw  up  the  documents  for  regularisation.

imprest  accounts, 

the 

to 

4.  Inadequate  separation  of  duties

Following  the  gradual  increase  in  staff  in  the  Financial
and  Administrative  Unit,  it  is  now  proving  possible  to

Finally,  the  accounting  officer  is  currently  assisted  by  a
temporary  assistant  book-keeper.