Report on the financial statements of the Community Plant Variety Office (CPVO - Angers) for the financial year ended 31 December 1998, together with the Office's replies
Date: 1999-10-07
Institutions: European Court of Auditors
Subjects: Community body, crop production, financial control, financial year, management audit, report

22.12.1999

EN

Official Journal of the European Communities

C 372/55

on the financial statements of the Community Plant Variety Office (CPVO (cid:151) Angers) for the
financial year ended 31 December 1998, together with the Office(cid:146)s replies

REPORT

(1999/C 372/10)

CONTENTS

Paragraph
reference

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

1-4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE COMMUNITY
PLANT VARIETY OFFICE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1998 . . . . . . . . . . . .

5-11

New premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advisory Committee on Procurement and Contracts (ACPC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Language courses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Staffing policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

6

7

8

Missions and reimbursement of expenses to experts and members of the administrative council

9-10

Delay in setting examination fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

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

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

Page

56

56

56

56

57

57

57

57

58

60

C 372/56

EN

Official Journal of the European Communities

22.12.1999

THE COURT(cid:146)S OPINION

1. This report is addressed to the administrative council of the
Community Plant Variety Office in accordance with Article 111(2)
of Council Regulation (EC) No 2100/94 (1).

2. The Court has examined the financial statements of the Com-
munity Plant Variety Office for the financial year ended 31 Decem-
ber 1998. In accordance with Article 110 of Regulation (EC) No
2100/94 the budget was implemented under the responsibility of
the President of the Office. This responsibility included the
drawing-up and presentation of the financial statements (2) in
accordance with the internal financial provisions provided for in
Article 112 of Council Regulation (EC) No 2100/94. The Court of
Auditors is required under Article 248 of the Treaty establishing
the European Community to audit those accounts.

The interior layout of the building and the impracticality of some
areas of it make it impossible to accommodate all the Office(cid:146)s staff
of around 30 people. For that reason it has been necessary to pur-
chase additional office space in a building behind the main build-
ing. The two buildings have a total area of 1 150 m2, only part of
which will be usable as offices. The interior of the main building
is to be totally redone, in order to accommodate the change of use
from hotel and restaurant to offices. A preliminary survey esti-
mated the cost of essential work as EUR 0,8 million, the amount
which was entered in the 1999 budget. The cost of the initial
design by the architect finally selected was around EUR 1,3 mil-
lion, an increase of 61 % on the estimate used at the time of the
decision to buy.

The estimated total for this transaction now breaks down as
follows:

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.

Acquisition of main building

Acquisition of offices in annex

(in EUR)

705 000

511 000

Estimates for conversion and fitting-out work

1 332 000

Total for transaction

2 548 000

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.

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE COMMUNITY PLANT VARIETY OFFICE FOR
THE FINANCIAL YEAR ENDED 31 DECEMBER 1998

New premises

The total amount actually charged to the Office(cid:146)s budget will be
reduced by the remaining part of the EUR 1,524 million subsidy
awarded by the local authorities to cover the costs of accommod-
ating the Office at Angers. As of 31 December 1998 EUR 0,172
million of the subsidy had already been used in connection with
the occupation of the Office(cid:146)s current premises.

In view of the nature of the conversion work, the Office should
take care to ensure that the proposed budget is adhered to.

5.
In 1998 the Office purchased a detached building (part of it a
listed building) situated in the centre of Angers, which, until
recently, was used as a hotel and restaurant.

Advisory Committee on Procurement and Contracts (ACPC)

(1) OJ L 227, 1.9.1994, p. 1.
(2) Pursuant to Article 111(2) of Regulation (EC) No 2100/94 the accounts
for all the Office(cid:146)s revenue and expenditure for the financial year 1998
were drawn up on 26 March 1999 and were sent to the Office(cid:146)s
Administrative Council, the Commission and the Court of Auditors
and the latter received them on 30 March 1999. The summary form
of those financial statements is published in the tables annexed to this
report.

6. The ACPC comprises three temporary officials of the Office
plus a representative of the financial controller in the capacity of
observer. Most of the draft decisions submitted to the ACPC are
from the President of the Office, who determines the work to be
carried out and the enterprise to which the contract is to be
awarded. Where the authorising officer is the President of the
Office, it would be preferable for him to nominate a manager to
submit the file to the ACPC.

22.12.1999

EN

Official Journal of the European Communities

C 372/57

Language courses

Missions and reimbursement of expenses to experts and
members of the administrative council

7. Expenditure on language courses for staff and members of
their families for the 1998 financial year amounted to ECU 48 524.
The courses were given and billed by only one enterprise. Since
the amount in question was over the threshold above which the
ACPC must be consulted, the matter was referred to that Com-
mittee. The statement of grounds submitted to the Committee by
the President of the Office with the draft decision announcing his
intention of continuing to work with the same enterprise for
courses in all languages was insufficient and no time limit was
given.

9. The Office reimburses part of the expenses of experts and
members of the administrative council through personal accounts.
Reimbursement to national administrations should be the rule for
all experts and members of the administrative council, any excep-
tion requiring due justification.

10.
In addition, travel tickets should always be presented, includ-
ing those for rail travel, and stamped clearly to show that they are
the object of a refund. In the case of air travel, the boarding card
should be presented to the Office.

Staffing policy

Delay in setting examination fees

8. The entire permanent workforce of the Office is made up of
temporary officials, of whom only three have contracts for an
unlimited period. There is considerable use of agency workers and
the expenditure on employment of this type amounted to ECU
136 382, an increase of 67 % compared with the previous year.
Despite all its efforts, the Office finds it difficult to recruit admin-
istrative staff on the basis of short-term temporary contracts,
while trying to preserve a balance between the various national-
ities.

11. The basic Regulation (1) provides, as regards proceedings
before the Office, that (cid:145)by 27 April 1997 the Administrative
Council shall have determined uniform methods for calculating
the costs ..., which shall apply to all designated Examination
Offices(cid:146). The administrative council has still not taken such a deci-
sion. The initial deadline of 27 April 1997 has been postponed
several times. The latest decision on this subject was taken during
the meeting of the administrative council on 7 and 8 April 1998
and deferred the target date to 31 December 1999.

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

(1) Commission Regulation (EC) No 1239/95 (OJ L 121, 1. 10. 1995,

p. 37).

C 372/58

EN

Official Journal of the European Communities

22.12.1999

Table 1

Balance sheet as at 31 December 1998 and 1997

Assets

1998

1997

Liabilities

1998

1997

(ECU 1 000)

Fixed assets
Land and buildings
Equipment and furniture
Computer equipment
Intangible assets

Current assets
Recoverable VAT
Sundry accounts receivable

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

Subtotal

1 202
58
93
29

1 383

185
138

Subtotal

323

6 902
150

7 052

Subtotal

Total assets

8 758

40
68
6

114

41
5

46

6 068
150

6 218

6 378

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

Fixed capital

Own capital
Balance for the financial year
Provisions for charges

Subtotal

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

1 383
4 994
165

6 542

1 552
36
185
443

114
5 131

5 245

916
43
41
132

Subtotal

2 216

1 133

Total liabilities

8 758

6 378

22.12.1999

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Official Journal of the European Communities

C 372/59

Revenue and expenditure account for the financial years 1998 and 1997

Table 2

(ECU 1 000)

1998

1997

0
306
4 873
263

Total revenue

5 443

Revenue

Subsidy received from the Commission
Other subsidies
Taxes (1)
Bank interest

Expenditure

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

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

Other expenditure (cid:151) Title X of the budget (reimbursement of 1995 Commission
subsidy)
Payments

Total expenditure

Out-turn for the financial year

Balance carried over from previous financial year
Appropriations carried over from previous financial year, which lapse
Exchange-rate differences

(1) For 1997 this amount includes a sum of ECU 78 800 collected in 1998.
Source: Prepared by the Court of Auditors on the basis of data compiled by the Office.

Balance for the financial year

1 948
37

1 776
222

497
1 293

5 772

(cid:150) 329

5 131
197
(cid:150) 5

4 994

0

3 959
206

4 165

1 392
49

374
80

147
787

300

3 130

1 035

3 885
223
(cid:150) 12

5 131

C 372/60

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Official Journal of the European Communities

22.12.1999

REPLIES OF THE OFFICE

New premises (paragraph 5)

Staffing policy (paragraph 8)

The total area of the two buildings purchased by the Office is
1 150 m†.

Eleven nationalities are currently represented on the Office(cid:146)s staff.

The area usable as offices is 418 m† in the first building and 188
m† in the second. The remaining area is composed of utility areas
that will be used for meeting rooms, waiting rooms, file deposi-
tories, control rooms, washrooms and corridors.

Concerning the refurbishment work, the Office will carefully
respect the criteria of sound financial management mentioned in
Article 2 of its Financial Regulation.

Through its new policy, the Office plans to phase out its use of
agency workers, to extend the contracts of temporary staff and to
organise competitions for certain staff posts within the Office,
with a view to being established, in accordance with the pro-
cedures laid down in the Staff Regulations.

Advisory Committee on Procurement and Contracts - ACPC
(paragraph 6)

Missions and reimbursement of expenses to experts and
members of the administrative council (paragraphs 9 and 10)

Except for exceptional cases that may justify submission of files
to the ACPC by the President of the Office, the files, in keeping
with past practice, will be submitted by a manager from the
Financial and Administrative Unit of the Office.

The Office undertakes to follow the reimbursement procedure
recommended by the Court.

Language courses (paragraph 7)

In the case mentioned by the Court, the draft decision submitted
to the ACPC was justified by the good past experience with the
provider of the services (language courses) and the attractive price
of these services.

In consideration of the observations issued by the Advisory Com-
mittee on Procurement and Contracts (ACPC), the contracts drawn
up with this contractor (fixed-term contracts) were renewed only
after an official evaluation of the courses by the participants
(quality of the enterprise and teachers, content and quality of the
courses). Furthermore, the improvement levels of the participants(cid:146)
language skills was and is tested on a regular basis.

However, in order to limit the long-term provision of language
courses for the members of staff(cid:146)s families, the President of the
Office will introduce a maximum time limit on the availability of
such courses.

Delay in setting examination fees (paragraph 11)

A call for expressions of interest was organised with a view to
recruiting a specialised accounting company to draw up methods
for calculating the costs of technical examinations, which shall
apply to all examination offices. This call for expressions of inter-
est was, however, unsuccessful.

The Office therefore has recruited as temporary agent a chartered
accountant (auditor) to perform this task. The administrative
council has in its meeting of 28 and 29 September 1999 decided
to continue until 1 January 1999 payment for tests performed on
request of the Office on the basis of the so-called in/out principle
(the examination fee received from an applicant is integrally paid
to the examination office that tests the variety in question). The
Office is of the opinion that the level of technical fees on the aver-
age is in line with the testing costs involved.