Report on the financial statements of The European Agency for Safety and Health at Work (EASH-Bilbao) for the financial year ended 31 December 1997 together with the Agency's reply
Date: 1998-11-05
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, financial control, financial year, management audit, report

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/19

on  the  financial  statements  of  The  European  Agency  for  Safety  and  Health  at  Work
(EASH-Bilbao)  for  the  financial  year  ended  31  December  1997  together  with  the  Agency’s
reply

REPORT

(98/C  406/03)

1.1. This  report  is  addressed  to  the  Management  Board
of  the  European  Agency  for  Safety  and  Health  at  Work
in  conformity  with  Article  14(4),  of  Council  Regulation
(EC)  No  2062/94 (1).

MAIN  OBSERVATIONS  ON  THE  IMPLEMENTATION  OF
THE BUDGET OF THE EUROPEAN AGENCY FOR SAFETY
AND  HEALTH  AT  WORK  FOR  THE  FINANCIAL  YEAR
ENDED  31  DECEMBER  1997

Budgetary  and  general  accounts

1.2. The Court has examined the financial statements of
the  European  Agency  for  Safety  and  Health  at  Work  for
the 
In
financial  year  ended  31  December  1997. 
accordance  with  Article  14(1),  of  Council  Regulation
(EC)  No  2062/94,  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  2062/94.  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.

1.5. As  the  Court  observed  in  its  report  concerning  the
financial  statements  of  the  Agency  for  the  financial  year
1996 (3),  the  Agency’s  budgetary  accounts  needed  to  be
improved in a number of areas. The audit of the accounts
for 
these
shortcomings  were  still  present.

financial  year  1997 

showed 

that 

the 

1.6. No general accounts were kept during the reference
year. The accounting officer, an auxiliary member of staff
who  was  not  recruited  until  November  1997,  had  to
reconstruct the Agency’s assets entirely before drawing up
the  year-end  balance  sheet,  which,  moreover,  had  to  be
revised  following  the  Court’s  audit.

1.7. The  budgetary  accounts  continue  to  be  kept  by
than  appropriate
means  of  a 
accounting  software.  They  are  not  detailed  enough  and
only  allow  a  rudimentary  monitoring  of  budgetary
bookings.

spreadsheet 

rather 

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.

Imprest  accounts

(1)  OJ  L  216,  20.8.1994,  p.  5.
(2)  As  required  under  Article  14(3),  of  Council  Regulation  (EC)
No  2062/94,  the  accounts  for  all  the  Agency’s  revenue  and
expenditure for the financial year 1997 were drawn up on 30
March  1998  and  forwarded  to  the  Agency’s  Management
Board,  the  Commission  and  the  Court  of  Auditors.  These
accounts  were  received  by  the  Court  on  3  April  1998.  A
summarised version of these financial statements is presented
in  the  tables  attached  to  this  report.

1.8. Nearly 46 % of the payments for the financial year
(ECU  1,4  million  out  of  a  total  of  ECU  3  million)  were
carried  out  via  the  Agency’s  imprest  account.  This
account  was  not  cleared  at  regular  intervals  and  this  is
how,  in  September  1997,  a  partial  regularisation  of
payments  came  to  be  carried  out  en  bloc  for  a  total  of
ECU  1,1  million  (despite  the  fact  that  the  ceiling  for  the

(3)  OJ  C  393,  29.12.1997,  p.  58.

C  406/20

EN

Official  Journal  of  the  European  Communities

28.12.98

account  was  fixed  at  ECU  25 000).  Furthermore,  the
regularisation  orders  only  mention  the  overall  amount
paid  out,  without  giving  details  of  the  budgetary
bookings  concerned.

1.9. The  Decisions  setting  up  the  Agency’s  imprest
account  should  be  revised  so  as  to  include,  in  particular,
the  establishment  of  an  individual  ceiling  for  payments.

Call  for  tenders

Other  observations

1.11. Contrary  to  the  Agency’s  Financial  Regulation,
neither  the  budget  nor  the  organisation  chart  for  the
financial year 1997 was published in the Official Journal
of  the  European  Communities.

1.12. Moreover,  in  the  minutes  of  the  November  1996
meeting,  during  which  the  Management  Board  examined
the  Agency’s  draft  budget,  there  is  no  mention  of  either
the  draft  budget’s  adoption  or  the  content  of  the
document  that  was  adopted.

1.10. The  Agency  should  issue  a  call  for  tenders  for  the
selection  of  new  contractors.  When  the  Agency  was
starting  up,  contracts  with  companies  were  made  by
private  treaty  or  following  restricted 
invitations  to
tender.

1.13. The  payments  for  the  financial  year  amounted  to
only  46,1 % 
the  current
(ECU  1,94  million)  of 
appropriations  (ECU  4,21  million).  Cancellations  (ECU
1,15  million,  or  27,3 %)  and  carry-overs  to  1998  (ECU
1,12 million, or 26,6 %) therefore represented significant
sums  for  the  Agency’s  1997  budget.

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

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Official  Journal  of  the  European  Communities

C  406/21

Table  1

Balance  sheet  for  the  financial  years  1996  and  1997

Assets

1997

1996

Liabilities

1997

1996

(ECU  1 000)

Fixed  assets
Equipment  and  furniture
Movable  equipment
Computer  equipment

Sub-total

Supplies
Office  equipment

Liquid  assets
Sundry  accounts  receivable
Recoverable  VAT  and  duties

Cash  accounts
Banks  —  demand  accounts
Imprest  account
Cash

Sub-total

Sub-total

Fixed  capital
Own  capital (1)
Balance  for  the  financial  year

Sub-total

575
731

1 306

32
830

862

295
30
235

560

15

5
152

157

25

7

32

34
16

50

Short-term  liabilities
Appropriations  carried  over  by
Budgetary  Authority
Automatic carry-overs
Sundry  accounts  due
Recoverable  VAT  and  duties

Sub-total

74

1 048
10
152

1 284

234

969
76
16

1 295

1 799
58
1

1 858

1 975
100

2 075

Total  assets

2 590

2 157

Total liabilities

2 590

2 157

(1)  The  amount  corresponds  to  fixed  assets  and  supplies.
Source:  Prepared  by  the  Court  on  the  basis  of  data  from  the  Agency.

C  406/22

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

Expenditure
Staff  —  Title  I
Payments
Appropriations  carried  forward

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

Operating  —  Title  III
Payments
Appropriations  carried  forward

Total  revenue

(ECU  1 000)

1997

1996

2 592
263

2 855

3 000
36

3 036

808
28

562
358

573
736

292

81
884

630
319

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

Total  expenditure

3 065

2 206

830

(210)
830
144
(33)

Balance  for  the  financial  year

731

830

Source:  Prepared  by  the  Court  on  the  basis  of  data  from  the  Agency.

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/23

REPLY  FROM  THE  EUROPEAN  AGENCY  FOR  SAFETY  AND  HEALTH  AT  WORK

1.  The Court of Auditors visited the European Agency for Safety and Health at Work from 30

March  to  3  April  1998  and  carried  out  the  audit  for  the  financial  year  1997.

2.  In  order  to  facilitate  the  work  of  the  Court,  the  accounts  and  all  relevant  supporting
documents  were  made  available  to  the  Court.  The  personnel  files  and  the  contracts
concluded  were  also  presented.

3.  In its letter of 15 July 1998, the Court informed the Agency of its main observations with a
view  to  drawing  up  the  report  on  the  financial  statements  of  the  Agency  (financial  year
1997).

4.  The  Agency  would  like  to  comment  on  the  following  paragraphs:

Budgetary  and  general  accounts

cases  where  payment 
foreseen.

is  urgent  and  could  not  be

1.5 and 1.7. As regards the use of the Excel programme
for  the  budgetary  accounts,  the  Agency  is  aware  of  the
weaknesses  of  the  system  currently  being  used  but  it
should  be  emphasised  that  the  agencies  are  currently
involved  in  a  joint  action  to  implement  the  SI  2
programme  provided  by  the  European  Commission.  It
would  not  be  appropriate  to  install  a  special  system
under  these  circumstances.

the  Court  of  Auditors, 

1.6. As  observed  by 
the
accounting  officer  was  recruited  towards  the  end  of  the
financial  year,  in  mid-November  1997.  The  delay  in  his
appointment explains the absence of any general accounts
for  1997.  The  accounting  officer  had  to  reconstruct  the
year’s  financial  operations  on  the  basis  primarily  of  cash
movements.  In  this  context,  the  audit  conducted  by  the
Court,  which  also  carried  out  the  audit  for  the  financial
year  1996,  allowed  certain  important  adjustments  to  be
made.

The  Agency  now  has  up-to-date  general  accounts.

Imprest  accounts

the 

regards 

imprest 

accounts, 

1.8. As 
suitable
administrative  staff  were  recruited  in  May  1997,  which
explains  the  global  regularisation  made  in  September.
Since  then,  a  new 
imprest  administrator  has  been
appointed. The amount of the imprest accounts has been
reduced by half and the relevant budget items relate only
to  expenditure  involving  compulsory  standing  orders  or

Calls  for  tenders

to 

follow 

is  endeavouring 

1.10. The  Agency 
the
recommendation of the Court in issuing calls for tenders.
It  has  therefore  published  two  calls  for  expressions  of
interest  (provision  of  services,  technical  assistance  and
supply  products,  and  cooperation  in  the  implementation
of  its  work  programme)  and  three  open  invitations  to
tender  (security  guards,  travel  agency,  and  telephonist
and receptionist services). Finally, it has organised several
restricted 
(security,  helpdesk,
selection  of  staff, 
training,  receptionist,  equipment
storekeeping,  medical  services  and  travel  insurance).

invitations 

tender 

to 

Other  comments

1.11.
In  order  to  avoid  this  situation  arising  again  with
regard  to  the  1998  budget  and  to  comply  with  the
Financial  Regulation,  and  with  a  view  to  reducing  the
very  high  costs  of  publication  (between  ECU  35 000  and
ECU  50 000),  the  Agency  put  forward  the  proposal  that
the  budgets  of  several  agencies  be  published  jointly.  To
this  end,  the  Office  for  Official  Publications  of  the
European  Communities  has  been  asked  to  indicate  the
price  and  timetable  for  a  joint  publication  involving  six
agencies.

The  Agency  is  concerned  to  ensure  that  its  budget
receives  maximum  publicity  by  publishing  it  on  the
Internet  (http://www.eu-osha.es).

C  406/24

EN

Official  Journal  of  the  European  Communities

28.12.98

1.12.
It is true that there is no documentary evidence to
show  that  the  Administrative  Board  of  the  Agency
approved the 1996 budget. In order to forestall comment
in this regard it was agreed, at the meeting of the Bureau
of  the  Administrative  Board  on  5  and  6  June  1997,  that
the minutes of meetings would include, in addition to the
account  of  the  discussions  at  meetings,  a  document
explaining  the  formal  decisions  taken, 
in  order  to
facilitate  their  retrieval.

view,  it  would  appear  logical  that  staff  expenditure  for
1997  was  less  than  estimated  in  the  budget.

As  regards  Title  II,  the  difference  between  commitments
and  payments  can  be  justified  in  particular  by  the  orders
for computer and security equipment which were made at
the  end  of  the  financial  year  and  which  had  to  be  paid
for  in  1998.

1.13. The under-utilisation of appropriations, which was
of  some  magnitude  as  regards  Title  I,  is  due  to  the  fact
that  staff  recruitment  procedures  launched  in  1997  were
not  concluded  until  1998.  From  an  economic  point  of

in  Title 

level  of  utilisation 

The 
III,  operational
expenditure, is a direct consequence of the staff situation
in  1997.  However,  the  level  of  commitments  was  very
high  and  contracts  regarding  studies  and  pilot  projects
concerning  safety  and  health  at  work  will  continue  to  be
implemented  throughout  1998.

5.  The  Agency  would  like  to  assure  the  Court  that  it  will  take  account  of  all  the  Court’s
observations, in order to respect in full the rules arising from financial and other regulations
to  which  all  its  actions  should  be  subject.