Report on the financial statements of the European Centre for the Development of Vocational Training (Cedefop - Thessaloniki) for the financial year ended 31 December 1998, together with the Centre's replies
Date: 1999-10-07
Institutions: European Court of Auditors
Subjects: Cedefop, financial control, financial year, management audit, report

C 372/26

EN

Official Journal of the European Communities

22.12.1999

on the financial statements of the European Centre for the Development of Vocational Training
(Cedefop(cid:151)Thessaloniki) for the financial year ended 31 December 1998, together with the
Centre(cid:146)s replies

REPORT

(1999/C 372/05)

CONTENTS

Paragraph
reference

THE COURT(cid:146)S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN
CENTRE FOR THE DEVELOPMENT OF VOCATIONAL TRAINING FOR THE FINANCIAL YEAR
ENDED 31 DECEMBER 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 12

General and budget accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Imprest accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

6

7

8

Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 to 10

VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

12

Tables 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Centre(cid:146)s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

27

27

27

27

27

27

27

28

28

29

31

22.12.1999

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Official Journal of the European Communities

C 372/27

THE COURT(cid:146)S OPINION

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

2. The Court has examined the financial statements of the Euro-
pean Centre for the Development of Vocational Training for the
financial year ended 31 December 1998. In accordance with the
provisions of Article 18(1) of Council Regulation (EEC) No
1416/76 (3), as amended by Council Regulation (EEC) No
1948/93 (4) the budget was implemented at 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 in
Articles 65, 67 and 68 of Council Regulation (EEC) No 1948/93
amending Council Regulation (EEC) No 1416/76. The Court of
Auditors is required under Article 248 of the Treaty establishing
the European Community to audit those accounts.

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

the Centre has still not completely developed and installed FIBUS
(a custom-made system). Apart from the delays in introducing it
and an absence of validation, the system is affected by a shortage
of documentation and the only person who knows the system is
the designer. The amount spent on developing this system dur-
ing the last two years was approximately ECU 0,2 million.

Imprest accounts

6. The Centre continues to make payments (especially in the case
of Title I) through imprest accounts (ECU 6 million). It would be
preferable for the use of imprest accounts to be reduced.

Buildings

7. According to the latest information from the Centre, owner-
ship of the land on which its offices are located will be transferred
to the Centre free of charge by the Greek Government when the
building work is completed.

4. This examination has enabled the Court to obtain reasonable
assurance that the annual accounts for the financial year ended 31
December 1998 are reliable and that the underlying transactions,
taken as a whole, are legal and regular.

Recovery orders

In future the Centre should establish all orders for recovery of

8.
revenue when the debt falls due.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE EUROPEAN CENTRE FOR THE DEVELOPMENT
OF VOCATIONAL TRAINING FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 1998

Staff

General and budget accounts

5. At present the Centre uses an old and complex system for
drawing up the budget and the balance sheet. Despite its efforts,

9. The determination of the financial entitlements of members
of staff does not systematically form the subject of decisions by
the Appointing Authority.

(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) Pursuant to Article 1 of Council Regulation (EEC) No 1948/93 amend-
ing Regulation (EEC) No 1416/76 the accounts for all the Centre(cid:146)s rev-
enue and expenditure for the financial year 1998 were drawn up on
29 March 1999 and were sent to the Commission and the Court of
Auditors and the latter received them on 30 March 1999. The sum-
mary form of those financial statements is published in the tables
annexed to this report.

10. Moreover, because the administration has not systematically
reviewed the entitlements acquired, the Court found that:

(a)

individual files do not always contain certain information that
is essential for calculating entitlements;

(b) some allowances may be paid after the end of the period for
which they were granted or without supporting documents.

C 372/28

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Official Journal of the European Communities

22.12.1999

VAT

Contracts

11. The requests for refund of VAT for 1998 had not been pre-
pared at the time of the audit (May 1999).

12. As regards calls for tender and contract management, some
reorganisation is called for. There were delays in issuing some
calls for tender.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 11 November 1999.

For the Court of Auditors

Jan O. KARLSSON

President

22.12.1999

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Official Journal of the European Communities

C 372/29

Revenue and expenditure account for the financial years 1998 and 1997

Table 1

Assets

1998

1997

Liabilities

1998

1997

(ECU 1 000)

Fixed assets (1)
Stocks

Current assets
Subsidy from the Commission
Sundry accounts receivable
Recoverable VAT
Expenditure to be charged

Cash accounts
Bank (cid:151) demand accounts
Imprest account

1 721
28

1 501
22

Fixed capital
Own capital
Balance for the financial year

1 749
697

Subtotal

2 446

Subtotal

0
63
230
628

921

5 025
365

Subtotal

5 390

3 989
53
679
335

5 056

331
442

773

Current liabilities
Social liabilities
VAT
Sundry accounts payable
Automatic carryovers of appropriations

Suspense accounts
Sums to be reused
Payments in progress
Sums to be collected (cid:151) imprest account

Subtotal

22
230
377
3 928

4 557

832
205
20

Subtotal

1 057

1 523
0

1 523

26
0
767
4 829

5 622

107
100
0

207

Total assets

8 060

7 352

Total liabilities

8 060

7 352

(1) An amount of ECU 5,4 million has already been paid for the construction of the building (estimated final cost approximately ECU 6,8 million).
Source: Prepared by the Court of Auditors on the basis of data from the Centre.

C 372/30

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Official Journal of the European Communities

22.12.1999

Revenue and expenditure account for the financial years 1998 and 1997

Table 2

(ECU 1 000)

1998

1997

12 943
10
0

Total revenue

12 953

Revenue

Subsidy from the Commission
Miscellaneous revenue
Earmarked revenue

Expenditure

Staff expenditure (cid:151) Title I of the budget
Payments
Appropriations carried over

5 421
599

878
528

2 433
2 776

Buildings, equipment and miscellaneous administrative expenditure (cid:151) Title II of the
budget
Payments
Appropriations carried over

Operating expenditure (cid:151) Title III of the budget
Payments
Appropriations carried over

Total expenditure

12 635

Out-turn for the financial year

Balance carried over from the previous financial year
Amount refunded to the Commission
Appropriations carried over from the previous financial year which lapse
Exchange rate differences
Recovery orders to be cancelled

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

Balance for the financial year

318

0
0
320
59
0

697

13 522
152
134

13 808

5 579
541

981
2 067

2 544
2 219

13 931

(cid:150) 123

1 623
(cid:150) 1 623
199
(cid:150) 61
(cid:150) 15

0

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Official Journal of the European Communities

C 372/31

REPLIES OF CEDEFOP

Cedefop considers that this preliminary report is generally posi-
tive and wishes to thank the Court of Auditors.

the appointing authority (Director) for signature. The sheets will
be placed in a special section of the personal file so as to make
them more accessible and transparent.

The nature of the Court(cid:146)s observations makes it possible for the
Management Board of the Centre to give a direct reply. The Man-
agement Board will follow the structure of the observations and
conclusions of the Court. The numbering of the annotated para-
graphs corresponds to the numbering used in the Court(cid:146)s report.

General and budget accounts

5. The Centre has appreciably accelerated and intensified its
efforts to complete this project since last year. All necessary
resources, including in terms of staff, have been deployed in order
to be able to finalise the experimental operation of the new sys-
tem by the end of 1999. The test phase to perfect the system is
currently under way. Parallel application with the current system
should cover the first half of the year 2000. Thus FIBUS will be in
full and exclusive operation from summer 2000. Throughout this
procedure there will be constant collaboration with the compe-
tent services of the Commission (in particular Financial Control).

Imprest accounts

6. The Centre has already taken the necessary steps to reduce the
payments made through imprest accounts. Indeed, since Febru-
ary 1999 salaries have been paid through the accounting system,
which means that the volume of transactions passing through the
imprest accounts has been reduced almost by half.

Recovery orders

8. The Centre has taken note of the Court(cid:146)s remarks and has
already introduced appropriate measures for this purpose. In
future, Excel sheets will be created for all these cases and this will
continue until FIBUS has also integrated this aspect and has
become fully operational.

10. The information and supporting documents mentioned by
the Court are available to the Administration, which will in future
ensure regular monitoring and updating. Staff management will
be updated more often by checking the accuracy of all staff data.
As indicated above, individual entitlements (including those of a
financial nature) will form the subject of formal decisions that will
be revised annually.

VAT

11. Most of the requests for refund of VAT for 1998 (– 90 % of
the total) were presented during June 1999. Because of the special
procedures which have been adopted, there is a small delay with
regard to Belgium, the Netherlands and Spain, but this will be rec-
tified in the course of summer 1999.

Contracts

12. The Centre has already recognised this necessity for change
and at the end of 1998 it recruited a specialist with long years of
Community experience in this field. Reorganisation began with
the aim of setting up a (cid:145)contract management(cid:146) unit in the Admin-
istration. An efficient electronic system is being developed, par-
ticularly with a view to improving the management and follow-up
of study contracts, and its integration into FIBUS is currently well
advanced.

Since this new (cid:145)contract management(cid:146) unit was set up (early 1999),
all calls for tender relating to the sole occupation of the new
building from September 1999 (two relating to equipment (audio-
visual conference equipment and security systems), two relating
to long-term services (cleaning and security) and one to the car-
rying out of the move) have been given priority in order to make
up the delay signalled by the Court. Others, relating to a new sur-
vey of the market for services continuously provided since the
establishment of Cedefop in Thessaloniki (bank, travel agency,
express courier, etc.) will be launched in the coming months.

Staff

9.
In order to ensure that the Court(cid:146)s recommendation is sys-
tematically followed, the Director has decided that the Adminis-
tration will from now on be responsible for drawing up the sheets
determining staff entitlements and that those sheets will then be
forwarded, at the responsibility of the Head of Administration, to

Finally, the responsibility for supervision and continuation of a
coherent approach to the execution of all the contracts covering
operations and services of a horizontal nature, including docu-
mentation, publications, data processing, etc., will be progres-
sively put under the administrative responsibility of this new unit,
which will then cover this aspect of operations.