Report on the financial statements and management of the European Centre for the Development of Vocational Training (CEDEFOP-Salonica) for the financial year ended 31 December 1997, together with the reply of the European Centre for the Development of Vocational Training
Date: 1998-11-26
Institutions: European Court of Auditors
Subjects: Cedefop, financial control, financial year, management audit, report

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/1

I

(Information)

COURT  OF  AUDITORS

on  the  financial  statements  and  management  of  the  European  Centre  for  the  Development  of
Vocational  Training  (CEDEFOP  —  Salonica)  for  the  financial  year  ended  31  December  1997,
together  with  the  reply  of  the  European  Centre  for  the  Development  of  Vocational  Training

REPORT

(98/C  406/01)

TABLE  OF  CONTENTS

Paragraph
reference

Page

THE  FINANCIAL  STATEMENTS  OF  THE  EUROPEAN  CENTRE  FOR  THE
DEVELOPMENT  OF  VOCATIONAL  TRAINING  FOR  THE  FINANCIAL
YEAR  1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 — 4

MAIN  OBSERVATIONS  ACCOMPANYING  THE  AUDIT  OPINION . . . . . . .

5 — 41

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scope  of  the  audit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 — 8

5 — 6

7

8

Main  observations  on  the  budgetary  execution . . . . . . . . . . . . . . . . . . . . . . . .

9 — 14

Separation  of  duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

Imprest  account

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 — 11

Transfers  of  appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 — 13

Carry-overs  and  cancellations  of  appropriations . . . . . . . . . . . . . . . . . . . . .

14

Main  observations  on  the  revenue  and  expenditure  account  and  the  balance
sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 — 22

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 — 16

Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 — 19

Balance  sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 — 22

Audit  of  the  Centre’s  premises  and  staff  situation . . . . . . . . . . . . . . . . . . . . . .

23 — 37

Temporary  premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 — 25

Permanent  premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26 — 35

Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 — 37

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38 — 41

Tables  1  to  4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

2

2

2

2

2

3

3

3

3

3

3

3

3

4

4

4

4

5

5

7

Reply  of  the  CEDEFOP  MANAGEMENT  BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

C  406/2

EN

Official  Journal  of  the  European  Communities

28.12.98

THE  FINANCIAL  STATEMENTS  OF  THE  EUROPEAN
CENTRE  FOR  THE  DEVELOPMENT  OF  VOCATIONAL
TRAINING  FOR  THE  FINANCIAL  YEAR  1997

MAIN  OBSERVATIONS  ACCOMPANYING  THE  AUDIT
OPINION

1. This  report  is  addressed  to  the  Council  and  the
European  Parliament  in  accordance  with  Article  12  of
Council  Regulation  (EEC)  No  337/75 (1),  as  amended  by
Regulation  (EEC)  No  1946/93 (2).

Introduction

Background

2. The  Court  has  examined  the  financial  statements  of
the  European  Centre  for  the  Development  of  Vocational
Training for the financial year ended 31 December 1997.
In  accordance  with  Article  18(1)  of  Council  Regulation
(EEC)  No  1416/76 (3),  as  amended  by  Regulation  (EEC)
No  1948/93 (4),  the  budget  was  implemented  under  the
responsibility  of 
the  Management  Board.  This
responsibility  included  the  drawing  up  and  presentation
of  the  financial  statements (5)  in  accordance  with  the
internal  financial  provisions  provided  for  under  Articles
65,  67  and  68  of  Council  Regulation  (EEC)  No  1948/93
amending  Regulation  (EEC)  No  1416/76.  The  Court  of
Auditors  is  required  under  Article  188c  of  the  Treaty
establishing  the  European  Community  to  examine  these
accounts.

3. The  Court  undertook  its  audit  in  accordance  with  its
audit  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 procedures as it deemed
necessary  in  the  circumstances.  Through  the  audit,  the
Court  obtained  sufficient  basis  for  the  opinion  expressed
below.

4. This  examination  has  allowed  the  Court  to  obtain
reasonable  assurance  that  the  accounts  for  the  financial
year  ended  31  December  1997  are  reliable  and  that  the
underlying  transactions  are,  on  the  whole,  legal  and
regular.

for 

5. The  European  Centre 
the  Development  of
Vocational  Training  (CEDEFOP)  was  established  by
Council  Regulation  (EEC)  No  337/75  as  a  satellite  body
of  the  European  Community  with  the  task  of  promoting
vocational 
level.  Cedefop
commenced  operations  in  Berlin  in  1976  and  moved  to
Salonica  in  1995.

training  at  Community 

of 

‘to 

training’, 

contributing 

6. The  same  Regulation  defines  its  role  as  that  of
assisting ‘the  Commission  in  encouraging,  at  Community
level,  the  promotion  and  development  of  vocational  and
in-service 
the
implementation  of  a  common  vocational  training  policy’
and, especially, encouraging ‘the exchange of information
and  the  comparison  of  expertise’.  Its  main  tasks  in  the
compile
field 
documentation,  to  contribute  to  the  development  and
to  disseminate  useful
coordination  of 
documentation  and 
to  encourage  and
support 
likely  to  facilitate  a  coordinated
approach  (specifically  in  respect  of  the  approximation  of
standards  and  the  mutual  recognition  of  certificates)  and
to  provide  a  forum  for  all  those  concerned’.

information, 

vocational 

initiatives 

research, 

training 

are 

‘to 

of 

Scope  of  the  Audit

7. The  Court  carried  out  a  financial  audit  of  the  1997
accounts  and  has  reviewed 
the  Centre’s  decisions
concerning  its  temporary  and  permanent  premises  and
staff  situation.

Financial data

(1)  OJ  L  39,  13.2.1975,  p.  1.
(2)  OJ  L  181,  23.7.1993,  p.  11.
(3)  OJ  L  164,  24.6.1976,  p.  1.
(4)  OJ  L  181,  23.7.1993,  p.  15.
(5)  As  required  under  Article  67  of  Regulation  (EEC)  No
1948/93  amending  Regulation  (EEC)  No  1416/76,  the
accounts  for  all  the  Centre’s  revenue  and  expenditure  in
respect  of  the  financial  year  1997  were  drawn  up  and
approved by the Management Board on 13 March 1998 and
forwarded  to  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.

8. Tables  1  and  2  summarise  the  Centre’s  financial
statements. Table 3 of this report gives an analysis of the
utilisation  of  the  appropriations  for  1997,  as  well  as  of
those  carried  over  from  1996.  Available  appropriations
for  the  financial  year  1997  amounted  to  ECU  14,5
million.  Commitments  entered  into  gave  rise  to  ECU  9,1
million  in  payments  and  ECU  4,8  million  in  carry-overs
to  the  financial  year  1998,  the  balance  of  ECU  0,6
million  having  been  cancelled.  Appropriations  carried
over  from  the  previous  financial  year  gave  rise  to  ECU
1,9  million 
in
cancellations.

in  payments  and  ECU  0,2  million 

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/3

Main  observations  on  the  budgetary  execution

the  number  of  staff  entering  and  leaving  the  service
during  the  financial  year.

Separation  of  duties

Carry-overs  and  cancellations  of  appropriations

9. The Centre has introduced satisfactory procedures for
the  separation  of  the  duties  of  authorising  officer,
accounting  officer  and  imprest  holder.  In  addition,  the
Centre  intends  to  install  an  EDP  accounting  system
specifically  adapted  to  its  needs.  The  Centre  considers
that  this  EDP  system  will  be  compatible  with  SINCOM
2, but also more flexible. It claims that SINCOM 2 on its
own is unsuitable for satellite bodies, and would give rise
to  additional  labour  costs  were  it  to  be  run  at  local
level.

Imprest  account

10. The  proportion  of  payments  made  through  the
imprest  account,  prior  to  approval  by  the  Financial
Controller,  fell  from  74 %  in  1996  to  60 %  in  1997.
This is due to the efforts made by the Centre in response
to  the  Court’s  remarks  of  last  year (6).

11. Payments concerning six budget headings were made
through  the  imprest  account  even  though  these  headings
had  not  been  included  in  the  Management  Board’s
related  decision.  As  these  budget  headings  do  not  relate
to  urgent,  ongoing  or  small  expenses,  where  the  risk  of
irregularities  is  comparatively  low,  it  is  recommended
that  these  payments  should  not  be  made  through  the
imprest  account.

Transfers  of  appropriations

12. The  value  of  transfers  of  appropriations  made
between  different  budget  headings  in  1997  was  ECU
758 200  (5 %  of  the  initial  budget),  down  from  ECU
891 600  in  1996.

13. The  transfers  were  made  within  Title  1  ‘Staff
expenditure’, the most notable being the transfer of ECU
239 500 from budget heading 1100 ‘Basic salaries’ which
was  allocated  mainly  to  the  budget  headings  under
Article  118  ‘Allowances  and  expenses  on  entering  and
leaving  the  service  and  on  transfer’,  which  accounted  for
ECU  214 000.  This  reflects  the  considerable  turnover  in

(6)  Report  on  the  financial  statements  and  management  of  the
European  Centre 
the  Development  of  Vocational
Training for the financial year 1996 (OJ C 393, 29.12.1997,
p.  1).

for 

the 

in  1997.  Nearly  63 %  of 

14. The volume of appropriations carried over increased
final
substantially 
appropriations  for  1997  were  paid  out  in  1997  as
compared  with  77 % 
in  1996.  The  percentage  of
commitments  entered  into  and  carried  over  to  1998  was
33 %  (14 %  in  1996).  The  percentage  of  cancellations
was  4 %,  compared  with  9 %  in  1996.  Table  4  shows
the carry-overs from the 1997 initial budget by Title, and
their  subsequent  use.  The  increase  is  due  mainly  to  an
amount  of  ECU  1,7  million  which  constituted  the  third
payment  for  the  construction  of  the  permanent  premises,
which,  although  foreseen  for  1997,  was  not  actually
made.

Main  observations  on  the  revenue  and  expenditure
account  and  the  balance  sheet

Revenue

15. The  EU  subsidy  set  aside  for  the  Centre  for  1997
was ECU 14,3 million. The Centre actually requested and
received  ECU  9,5  in  1997  and  ECU  4  million  in  1998.

16.
In  1997,  Norway,  the  only  non-Member  State,  paid
the  Centre  a  contribution  of  ECU  126 282  million  in
respect  of  its  participation  in  the  work  programme.

Expenditure

17. The  audit  of  payment  transactions  revealed  certain
areas  of  weaknesses,  the  most  important  of  which  are:

(a)  as the Court observed last year (7), the requirement to
carry  out  tendering  procedures  or  to  obtain  other
offers  was  not  always  respected

(b) in 

the  case  of  certain 

types  of  administrative
expenditure,  the  local  tax  rules  regarding  the  type  of
document to be furnished by suppliers (eg. an invoice
authenticated  by  the  tax  authorities)  were  not  always
respected

(c)  there  is  no  clear  short-  and  medium-term  plan
regarding capital expenditure and the external services
provided  to  the  Electronic  Data  Processing  (EDP)
department

(d) the  selection  procedures  in  respect  of  study  contracts
are  not  fully  transparent  and,  coupled  with  the
absence of adequate controls in the monitoring of this
area  of  expenditure,  there  is  an  increased  risk  of
error.

C  406/4

EN

Official  Journal  of  the  European  Communities

28.12.98

18. As far as the tendering procedures for administrative
expenditure are concerned, it was noted that a number of
these  procedures  were  conducted  half-way  through  the
financial year. The success of these procedures in the light
of  the  response  rates,  was  diminished  by  the  failure  to
advertise  within  the 
local  market  through  regional
newspapers.  Irrespective  of  this,  the  Centre  decided  to
proceed  with  the  selection  of  contractors.

lack  of  a  clear  plan  regarding  the  EDP
19. The 
department’s  expenditure  results 
in  contracts  being
awarded  without  the  lowest  price  necessarily  being
is  due  primarily  to  contracts  being
obtained.  This 
awarded  in  a  haphazard  manner.  One  local  supplier,
obtained 
approximately
ECU 75 600  in  1997  alone  following  a  limited  tender
procedure  or  no  tender  procedure  at  all.

contracts 

totalling 

three 

Balance sheet

20. The  fixed  assets  of  ECU  1 501 171  recorded  in  the
1997  balance  sheet,  and  for  which  an  up-to-date
inventory  list  existed,  represent  the  historic  cost  of
furniture  and  equipment.

21. As  the  Court  observed  last  year (7),  the  Centre  is
taking  responsibility  for  managing  large  cash  balances.
There  has  been  a  substantial  improvement  over  the  past
year,  with  bank  interest  received  in  1997  amounting  to
ECU  152 280,  as  compared  with  ECU  286 486  in  1996.
Nevertheless,  the  Court  recommends  that  the  Centre
should further improve the accuracy of amounts it draws
quarterly  from  the  Commission  and  should  request  only
the  funds  required  to  cover  its  actual  short-term  cash
needs.  In  addition,  a  clear  credit  policy  should  be
established  regarding  payments  to  suppliers.  In  some
cases  payments  were  made  without  advantage  having
been  taken  of  the  credit  terms  available.

22. The  balance  sheet  includes  an  amount  of  ECU
678 514  relating  to  ‘VAT  to  recover’,  of  which  ECU
371 843 relates to Value Added Tax (VAT) due from the
German tax authority, ECU 290 887 due from the Greek
tax  authority  and  ECU  15 784  due  from  other  Member
States.  Officials  of  the  German  tax  authority  have  stated
that  they  intend  to  audit  the  claims  made  on  the  spot,
prior  to  making  any  reimbursement.  The  amounts  due
from  the  Greek  tax  authority  concerning  financial  years
1995  and  1996  were  paid  to  the  Centre  in  1998.  The

(7)  Report  on  the  financial  statements  and  management  of  the
European  Centre 
the  Development  of  Vocational
Training for the financial year 1996 (OJ C 393, 29.12.1997,
p.  1).

for 

Centre  is  requested  to  submit  the  1997  claim  to  the
Greek  tax  authority  and  all  other  claims  to  the  other
Member  States  as  soon  as  possible.  In  future  such  delays
in  submitting  claims  for  the  reimbursement  of  VAT
should  be  avoided.

Audit  of  the  Centre’s  premises  and  staff  situation

Temporary  premises

23. As  the  Court  observed  last  year (7),  the  Centre  had
to invest an amount of GRD 44 million or approximately
ECU  125 000  to  fit  out  its  premises  and  to  render  the
temporary  building  functional  and  ‘ready  for  use’.  The
Centre  explained  that  ‘these  costs  were  incurred  to
improve  the  conditions  for  efficient  functioning  of  the
Centre’.

24. Owing  mainly  to  the  vagueness  of  the  rental
agreement, it is unclear as to who will eventually be liable
for  these  costs.

25. The  Centre’s  management  should  ensure  that  all
movable assets in which investments have been made are
transferred  to  the  new  premises  under  construction  and
that,  wherever  there  is  a  strong  case,  all  necessary
precautions are taken to ensure that expenditure incurred
in  respect  of  specific  types  of  immovable  assets  is
recovered.

Permanent  premises

26. On  22  June  1995  the  Centre  and  the  Greek  State
signed  a  basic  agreement  concerning  the  construction  of
the  permanent  building.

Payments  by  the  Centre  to  the  Greek  State

27. According  to  the  abovementioned  agreement,  the
Centre  was  to  pay  the  Greek  State  ECU  6 879 750  in
four  equal  instalments  of  ECU  1 719 937.  The  first  two
were paid in December 1995 and in September 1996 and
the  third  payment  was  due  on  1  September  1997.  The
Budget  Authority  agreed  that  this  third  instalment  could
be  paid  in  December  1997,  but,  owing  primarily  to  the
current  stage  of  progress  reached  in  the  construction
work  and  the  failure  of  OEK  (the  national  Workers
Housing Organisation), the organisation appointed by the
Greek  State  to  manage  the  project,  to  submit  a  financial
report,  the  payment  has  not  yet  been  made.  The  last
instalment  will  be  paid  when  the  building  has  been
handed  over.

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/5

Current  stage  reached  in  the  construction  work

of  fixed-asset  purchases  should  be  financed  and  whether
the  actual  Centre  or  OEK  should  be  purchasing  them.

28. The  building’s  foundation  stone  was  laid  officially
on  6  September  1997  and,  following  a  tendering
procedure,  the  contract  was  signed  on  31  October  1997
for  an  amount  of  GRD  1 048  million  (or  approximately
ECU 3,1 million at the current exchange rate of ECU 1 =
GRD  345).  The  final  version  of  the  construction  plans
were approved in May 1998, following the incorporation
of  certain  necessary  amendments,  the  estimated  financial
effect  of  which  brings  the  total  cost  to  some  GRD  1 720
million  (or  approximately  ECU  5  million).

It  is  recommended  that  a  detailed  list  of  the
34.
purchases  that  are  to  be  financed  out  of  the  above
amount  and  details  of  who  will  be  responsible  for  these
purchases  should  be  drawn  up  and  agreed  with  the
European Parliament.

35.
In addition, following the recent realignement of the
drachma, the exchange rate that the Greek State is to use
when  submitting  its  returns  remains  to  be  determined.

29. At  present,  the  excavation  work  has  almost  been
completed  and  the  foundations  are  being  laid.  The  first
account  was  submitted  by  the  contractor  to  OEK  for
payment  at  the  end  of  March  1998  and  amounted  to
GRD  73 360 000  (or  approximately  ECU  215 000).  It
should be noted that OEK will receive a 5 % commission
fee  for  the  services  it  provides  to  the  Centre.

30. Taking  the  financial  budget  submitted  by  the
contractor as a basis, the actual costs at the end of 1998
are  not  expected  to  exceed  the  total  of  the  two  advances
paid in 1995 and 1996 by the Centre to the Greek State;
they  are  expected  to  reach  GRD  1 000  million  (or
approximately  ECU  2,9  million).

Staff

36.
In  1997,  the  staff-complement  table  showed  81
permanent  and  temporary  posts  at  the  following  grades:
25  A,  11  LA,  15  B,  27  C  and  three  D.

37. There  are  68  officials  currently  working  for  the
Centre,  61  in  Salonica,  three  in  Brussels  and  four  on
special  leave  (CCP).  A  further  26  persons  work  in  the
capacity  of  national  experts,  local  agents  and  auxiliary
staff.

Conclusion

that 

the 

third

It 

31.
instalment  be  paid  only  when:

therefore 

is 

recommended 

(a)  the  actual  costs  reach  an  acceptable  level  in  relation

to  the  previous  advances  paid,

(b) a  detailed  financial  report  has  been  submitted  by
OEK;  this  report  should  be  based  on  the  accounts
actually  submitted  by  the  contractor,  and

(c)  the Centre has carried out the necessary checks on the

abovementioned  report.

Completion  of  the  building

32. Further  expenditure  will  be  required  to  render  the
building  ‘usable’.  The  costs  involved  relate  mainly  to  the
purchase  of  furniture  and  fittings  and  to  the  installation
of  specialised  equipment.  The  difference  that  is  expected
to  arise  between  the  total  budget  available  for  the
building  of  ECU  6,9  million  and  its  estimated  total  cost
of  ECU  5  million  as  stated  above,  whilst  allowing  for
inflation,  OEK’s  fees,  and  so  on,  amounts  to  ECU  1,9
million.

33. With  regard  to  the  above  amount  of  ECU  1,9
million,  there  is  currently  no  agreement  as  to  what  type

38. The  Centre  should,  in  all  instances,  respect  the
requirement  to  carry  out  tendering  procedures  or  to
obtain other offers. Furthermore, it should always respect
the  local  tax  rules  and  should  improve  the  transparency
of the selection procedures relating to study contracts (see
paragraphs  17  to  19).

39. Although substantial improvements were noted with
regard  to  the  size  of  the  cash  and  bank  balances,  the
Centre  should  further  improve  the  accuracy  of  the
amounts  of  its  quarterly  drawings  from  the  Commission
and  should  request  funds  to  cover  only  its  actual
short-term  cash  needs.  It  should  also  establish  a  clear
credit  policy  regarding  payments  to  suppliers  (see
paragraph  21).

40. The  Centre  is  recommended  to  submit  the  1997
claim  for  the  reimbursement  of  VAT  to  the  Greek  tax
authority  and  to  make  all  other  claims  on  the  other
Member  States  as  quickly  as  possible  (see  paragraph
22).

41. The  Centre  is  requested  to  monitor  closely  the
construction  work  on  the  permanent  premises. 
In
addition,  a  detailed  list  of  the  fixed-asset  purchases  that
are  to  be  financed  from  the  amount  of  ECU  1,9  million
and details of who will be responsible for these purchases
should  be  drawn  up  and  agreed  with  the  Budget
Authority  (see  paragraphs  26  to  35).

C  406/6

EN

Official  Journal  of  the  European  Communities

28.12.98

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

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/7

Table  1

Balance  sheet  at  31  December  1997

Assets

1997

1996

Liabilities

1997

1996

(in  ECU  1 000)

Fixed  Assets
1.  Furniture  and  equipment

1 501

1 444

Fixed  Capital
1.  Own  Capital
2.  Balance  for  the  financial  year

1 523
0

1 450
1 623

Current  Assets
1.  Stocks
2.  Sums  to  be  recovered
3.  Advances
4.  VAT  to  recover
5.  Expenditure  to  be  charged
from 
6.  Amounts 

due 

Commission

the

22
26
15
679
335
3 989

7
66
8
483
294
0

Current  Liabilities
1.  Salary deductions
2.  Other liabilities

26
755

82
654

Sums  to  be  reused

107

133

Cash  Accounts
1.  Bank  account
2.  Imprest  account

Appropriations  carried  over

4 829

2 151

331
442

3 151
882

Payments  in  progress

100

242

Sums  to  be  recovered

12

29

Sums  to  be  recovered

12

29

7 352

6 364

7 352

6 364

Source:  1997  Annual  Accounts  of  the  Centre.

C  406/8

EN

Official  Journal  of  the  European  Communities

28.12.98

Table  2

Revenue  and  expenditure  account  for  the  year  ended  31  December  1997

Revenue
1.  Subsidy  received  from  the  Commission
2.  Miscellaneous revenue
3.  Revenue  from  services  rendered  against  payment

Expenditure
Staff  expenditure
1.  Payments  for  the  year
2.  Appropriations  carried  over

Administrative  expenditure
1.  Payments  for  the  year
2.  Appropriations  carried  over

Operating  expenditure
1.  Payments  for  the  year
2.  Appropriations  carried  over

Appropriations  carried  over  (Article  6(3)  and  Article  3(2))

(in  ECU  1 000)

1997

1996

13 522
152
134

14  410
286
144

Total  (a)

13 808

14  840

5 579
541

981
2  067

2 544
2 204

15

6 225
510

2 667
258

2 492
1 383

0

Total  Expenditure  (b)

13 931

13 535

Out-turn  for  the  year  (a)  −  (b)
Balance  carried  over  from  previous  year
Amount  refunded  to  the  Commission
Appropriations  carried  over  from  the  previous  year  which  lapse
Appropriations  carried  over  (Article  6(3)  and  Article  3(2))
Exchange  differences  for  the  year
Cancellation  of  established  entitlements

− 123
1 623
− 1 623
199
− 1
− 61
− 14

1 305
2 013
− 2 013
616
0
− 298
0

Balance  for  the  year

0

1 623

Source:  1997  Annual  Accounts  of  the  Centre.

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/9

Table  3

Financial  year  1997  —  Utilisation  of  available  appropriations

Title

Definitive

Payments

Carry-overs

Cancelled

Available

Payments

Cancelled

1997  Budget

Carry-overs  from  1996

(in  ECU  1 000)

1.  Staff  expenditure

6 543

2.  Administrative  expenditure

3 092

3.  Operational  expenditure

4 891

Total

14 526

5 579
(85,3)

981
(31,7)

2 544
(52,0)

9 104
(62,7)

541
(8,3)

2 067
(66,8)

2 204
(45,1)

4 812
(33,1)

423
(6,4)

44
(1,5)

143
(2,9)

610
(4,2)

510

258

1 383

2 151 (*)

465
(91,2)

225
(87,2)

1 261
(91,2)

1 951
(90,7)

45
(8,8)

33
(12,8)

122
(8,8)

200
(9,3)

The  figures  in  brackets  indicate  the  percentage  of  definitive  or  available  appropriations.

(*)  All automatic carry-overs.

Source:  1997  Annual  Accounts  of  the  Centre.

Table  4

Financial  year  1997  —  Carry-overs  from  the  1997  initial  budget

(in  ECU)

Carry-over
from  1997

Carry-over  as
%  of  initial
budget

Carry-overs
paid  out
1.1.  —
31.3.1998

%  of  1997
carry-over used
by  31.3.1998

541 469

2 066 951

2 203 864

8,3

66,8

45,1

92 984

184 268

927 981

17,2

8,9

42,1

Total

4 812 284

33,1

1 205 233

25,0

Staff  expenditure

Administrative  expenditure

Operational  expenditure

Source:  1997  Annual  Accounts  of  the  Centre.

C  406/10

EN

Official  Journal  of  the  European  Communities

28.12.98

REPLY  OF  THE  CEDEFOP  MANAGEMENT  BOARD

The  nature  of  the  observations  of  the  Court  of  Auditors
makes  it  possible  for  the  Management  Board  of  the
Centre to react in a direct manner. The Board will follow
the structure of the Court’s observations and conclusions.
The  numbering  of  the  annotated  paragraphs  corresponds
to  that  used  in  the  Court’s  report.

11. The  Centre  understands  the  remarks  but  adds  the
following  reflections.  On  account  of  the  modification  to
the  decision  setting  up  an  imprest  account  and  the  items
covered  by  it,  there  was  confusion  over  the  items
previously  covered  in  the  former  regulation.  In  the
meantime the Centre has adopted the necessary measures
to  ensure  that  this  no  longer  reoccurs  and  has  made
provision  that  the  new  accounting  system  has  sufficient
internal  checking  mechanisms.

14. The  Court  is  right  in  pointing  out  that  the  main
reason  for  the  increase  in  appropriations  carried  over  to
1998  was  the  decision  of  the  Centre  not  to  allow  for
payment  of  the  third  instalment  for  the  new  building  to
the  Greek  authorities  before  certain  key  conditions
(agreed  with  the  Commission  and  acknowledged  by  the
Greek  government  itself)  had  been  fulfilled.  The  de  facto
progress  was  not  substantial  enough 
this
instalment.  The  payment  of  the  third  instalment  of  the
new  building  was  made  provisional  to  receipt  from  the
Greek  authorities  of:

to  pay 

—  definitive  plans,

—  detailed  financial  data  ensuring  transparency  of  costs
taking  into  consideration  the  improvements  over  the
original proposals,

—  indications of payments already made on the basis of

the  progress  achieved.

The  progress  of  the  construction  work  was  not  delayed
or  disrupted.  The  Centre  was  able  to  maintain  its  tough
line on the matter. In CEDEFOP’s progress report on the
new  building  of  late  June  1998,  requested  by  the
European  Parliament,  the  situation  is  clearly  assessed.

15. According  to  the  Court’s  statement,  the  Centre
requested throughout the year payments of the subsidy to
cover  spending  needs.  However,  at  the  end  of  1997  and
on  the  advice  of  Financial  Control,  CEDEFOP  asked  for
transfer  of  the  subsidy  to  the  amount  required  to  cover
the  commitments  incurred.  These  were  received  during

the  month  of  January  1998.  It  is  from  this  perspective
that the Centre did not request the first instalment of the
1998  subsidy.

17a. The Centre reaffirms its adherence to the principles
of  competition,  although  it  has  not  always  been  possible
to  respect  them  in  the  past  owing  to  the  delays  inherent
in  carrying  out  tendering  procedures  and  the  need  of  the
Centre  to  establish  itself  quickly  in  Thessaloniki.  It
should  be  noted  however  that  CEDEFOP  attained  more
or  less  full  operational  activity  in  1997,  and  issued  the
majority of calls for tender for administrative expenditure
and  a  call  for  an  expression  of  interest  for  office
furniture.

17b. After  two  years  in  Greece  the  Centre  now  has
experience  in  this  area  and  will  be  more  vigilant  in
ensuring  that  the  few  errors  which  did  occur  are
avoided.

17d. Concerning the operational expenditure, the Centre
made  a  call  for  an  expression  for  interest  (OJ  S  107,
5.6.1997  and  OJ  C  214,  16.7.1997).  Since  ascertaining
the  results  of  the  call,  all  the  contracts  signed  have  been
based 
the
abovementioned  results.  This  ‘window  opening’  exercise
has  had  a  positive  impact  on  the  quality  of  our  external
contractors.

procedure 

restricted 

using 

on 

a 

While  awaiting  the  monitoring  of  the  contracts  via  the
new  software  currently  being  developed  in  CEDEFOP,
the administration, following the remarks of the Court of
Auditors  during  their  visit,  has  drawn  up  a  standard
check-list  to  accompany  each  contract  and  to  ensure
precise  monitoring  of  progress  in  each  contract.

regards 

contracts 

18.
It  was  only  when  urgent  staffing  and  organisational
problems  resulting  from  the  move  had  been  satisfactorily
overcome, that it became possible to review the situation
as 
administrative
expenditure  and  to  prepare  to  launch  the  appropriate
calls  for  tenders.  This  explains  why  these  procedures
were  implemented  during  the  financial  year  and  not
before  it  started.  Initially,  publication  in  the  special  S
series  of  the  OJ  seemed  to  be  the  reasonable  course  to

relating 

to 

28.12.98

EN

Official  Journal  of  the  European  Communities

C  406/11

take,  but  in  the  light  of  the  poor  response  to  which  the
Court  points,  the  Centre  drew  the  conclusion  that  it
should  proceed 
in  a  different  way.  Therefore,  the
following  call  for  tenders  (OJ  S  139,  19.7.1997),
pursuant  to  a  decision  of  the  Management  Board,  was
also  published  in  the  local  press,  and  this  procedure  will
be  followed  in  future.

19. The  remarks  of  the  Court,  which  are  in  fact  valid
for  1997,  reflect  the  fact  that  the  Centre  quickly
equipped  itself  with  IT  capacities  that  could  underpin  its
renewed  and  expanding  activity.  The  present  success  of
our  electronic  links  with  our  clients  and  partners  could
not  have  been  achieved  without  this  somewhat  robust
approach.  The  Centre  has,  however,  drawn  up  in  the
meantime  a  short/medium  term  plan  for  the  informatics
(hardware,  software  and  training)  and  will  soon  finish
tendering  procedures  for  equipping  the  new  building.

22. On  8  October  1998  the  Centre  received  the
reimbursement of the VAT for the years 1995-1997 from
the  German  tax  authorities.

Concerning  the  VAT  claim  to  the  Greek  tax  authorities,
the  delay  is  mainly  due  to  a  lot  of  work,  especially  as  a
consequence  of  the  move  from  Berlin  to  Thessaloniki.
Moreover, the Greek tax authorities require lists annexed
with  all  the  original  invoices.  This  obviously  entails  a
heavier  workload  for  the  staff  involved  in  preparing  the
files. The claim for financial year 1997 has been made on
11 June 1998, so the Centre expects to receive the money
back  before  the  end  of  1998.  The  Centre  is  currently
considering taking the appropriate internal organisational
measures  which  would  allow  it  to  be  able  to  make  the
claims  on  a  more  frequent  basis.

21. The  Centre  will  try  to  improve  further  the  cash
balance  outstanding.  The  establishment  of  a  clear  credit
policy,  however, 
in  view  of  the
underdeveloped  banking  and  payment  system  in  Greece.

laborious 

is  very 

28-30. The  Centre  follows  very  closely  the  progress  of
the new building and reports every half year as asked by
the European Parliament. The last report (end June 1998)
indicates  that  the  building  will  be  ready  on  schedule  and
with the budget originally foreseen. The de-facto progress
can 
page
Internet 
on 
(http://www.cedefop.gr/documents/archives.html).

studied 

our 

be