Report on the financial statements of the European Agency for Safety and Health at Work (EASH - Bilbao) for the financial year ended 31 December 1998, together with the Agency's replies
Date: 1999-10-07
Institutions: European Court of Auditors
Subjects: European Agency for Safety and Health at Work, financial control, financial year, management audit, report

22.12.1999

EN

Official Journal of the European Communities

C 372/1

I

(Information)

COURT OF AUDITORS

on the financial statements of the European Agency for Safety and Health at Work
(EASH(cid:151)Bilbao) for the financial year ended 31 December 1998, together with the Agency(cid:146)s
replies

REPORT

(1999/C 372/01)

CONTENTS

Paragraph
reference

Page

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

1 to 4

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE BUDGET OF THE EUROPEAN AGENCY
FOR SAFETY AND HEALTH AT WORK (EASH - BILBAO) FOR THE FINANCIAL YEAR ENDED 31
DECEMBER 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 11

Financial statements and accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 to 6

Implementation of the budget/Principle of annuality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 to 8

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

Calls for tender/Advisory Committee on Procurements and Contracts (ACPC) . . . . . . . . . . . . . . . .

Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

10

11

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

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

2

2

2

2

2

2

2

4

6

C 372/2

EN

Official Journal of the European Communities

22.12.1999

THE COURT(cid:146)S OPINION

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

2. The Court has examined the financial statements of the Euro-
pean Agency for Safety and Health at Work for the financial year
ended 31 December 1998. In accordance with Article 14(1) of
Council Regulation (EC) No 2062/94, the budget was imple-
mented under the responsibility of the Director. This responsibil-
ity included the drawing-up and presentation of the financial
statements (2), in accordance with the internal financial provi-
sions, as provided for in Article 15 of Council Regulation (EC) No
2062/94. The Court of Auditors is required under Article 248 of
the Treaty establishing the European Community to audit these
accounts.

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. 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.

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.

6. The Agency(cid:146)s accounts department should balance the
accounts regularly and carry out the reconciliations and analyses
of the various balances which the implementing provisions for its
financial regulation provide for.

Implementation of the budget/Principle of annuality

7. Out of a total of ECU 1,05 million of appropriations auto-
matically carried over from the financial year 1997, only ECU
0,65 million (62 %) was actually used. The remaining 38 % (ECU
0,4 million) was cancelled. The total amount of cancellations does
not comply with the nature of automatic carry-overs, which ought
to correspond to obligations to third parties remaining unfulfilled
at the end of the financial year.

8. Commitments automatically carried over to the financial year
1999 (ECU 1,9 million) were examined, and in the case of some
carry-overs it was not possible to confirm that they were justi-
fied. The Agency(cid:146)s practice concerning carry-overs of appropria-
tions does not conform to the principle of annuality enshrined in
its Financial Regulation.

VAT

9. The Agency has still not recovered the VAT paid during the
financial years 1996 and 1997 (ECU 145 000).

MAIN OBSERVATIONS ON THE IMPLEMENTATION OF THE
BUDGET OF THE EUROPEAN AGENCY FOR SAFETY AND
HEALTH AT WORK (EASH(cid:151)BILBAO) FOR THE FINANCIAL YEAR
ENDED 31 DECEMBER 1998

Calls for tender/Advisory Committee on Procurements and Con-
tracts (ACPC)

Financial statements and accounting

10. The deadline for submitting tenders should be at least 40
days, to enable more tenders to be received. Calls for tender should
lay down clearly defined criteria, which should be used as a basis
for the ACPC(cid:146)s assessments.

5. The Agency did not provide any supporting documents to
substantiate a sum of ECU 5 000 which appears in the liabilities
section of the end-of-year balance sheet under the description
(cid:145)Sundry accounts due(cid:146).

Premises

(1) OJ L 216, 20.8.1994, p. 1.
(2) As required under Article 14(3) of Council Regulation (EC) No
2062/94, the accounts for all the Agency(cid:146)s revenue and expenditure
for the financial year 1998 were drawn up on 25 March 1999 and
forwarded to the Agency(cid:146)s Management Board, the Commission and
the Court of Auditors. These accounts were received by the Court on
9 April 1999. A summarised version of these financial statements is
presented in the tables attached to this report.

11. The landlord has negotiated a bank guarantee to ensure that
the Agency fulfils its obligations in relation to its tenancy agree-
ment. In general, this type of guarantee is not needed for a Euro-
pean Union body. In order to prevent it being extended, it would
be advisable to restart negotiations before it expires.

22.12.1999

EN

Official Journal of the European Communities

C 372/3

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 7 October 1999.

For the Court of Auditors

Jan O. KARLSSON

President

C 372/4

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
Equipment and furniture
Movable equipment
Computer equipment

Supplies
Office equipment

Subtotal

405
26
273

704

295
30
235

560

9

15

Debts receivable in the short term
VAT to be recovered
Sundry accounts receivable

145

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

Subtotal

145

3 067
61
1

3 129

Subtotal

Total assets

3 987

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

152
5

157

1 799
58
1

1 858

2 590

Fixed capital
Own capital
Balance for the financial year

713
668

575
731

Subtotal

1 381

1 306

Short-term liabilities
Non-automatic carry-overs of appropriations
Automatic carry-overs
Sundry accounts due
Tax and social security debts
VAT

Subtotal

Transit accounts
Revenue for reuse

74
1 048

10
152

1 284

270
1 925
174
31
145

2 545

61

Total liabilities

3 987

2 590

22.12.1999

EN

Official Journal of the European Communities

C 372/5

Revenue and expenditure accounts for the financial years 1998 and 1997

Table 2

(ECU 1 000)

1998

1997

Revenue

Commission subsidy
Other subsidies
Interest

Expenditure

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

Total revenue

Buildings, equipment and various items of operating expenditure (cid:151) Title II of the
budget
Payments
Appropriations carried forward

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

Total expenditure

Out-turn for the financial year

Balance carried over from the previous financial year
Appropriations carried over from the previous financial year and cancelled
Exchange rate differences

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

Balance for the financial year

4 196
180
101

4 477

1 486
27

589
148

686
2 020

4 956

(cid:150) 479

731
402
14

668

2 592
192
71

2 855

808
28

562
358

573
736

3 065

(cid:150) 210

830
144
(cid:150) 33

731

C 372/6

EN

Official Journal of the European Communities

22.12.1999

REPLIES 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 14 to 18 December

1998 and from 3 to 7 May 1999 and carried out the audit for the financial year 1998.

2.

3.

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.

In its letter of 24 June 1999, the Court communicated to the Agency its observations that were likely to
appear in its report on the financial statements of the Agency for the financial year ended 31 December
1998. The Court requested the Agency to submit its comments on these observations.

4. For this purpose, the Agency would like to comment on the following paragraphs.

Financial statements and accounting

5. Observation relating to third-party creditors

The balance of suppliers(cid:146) accounts indicated by the Court of Audi-
tors, i.e. ECU 5 000 (3 % of the total for the suppliers(cid:146) accounts)
is constituted by a number of arrears which are difficult to ident-
ify due to the large number of movements on the suppliers(cid:146)
accounts. The Agency undertakes to provide, at the end of the
financial year 1999, a breakdown by supplier of the (cid:145)Sundry
accounts due(cid:146) entry in the balance sheet; this measure is included
in the review of the progress achieved during the financial years
1998 and 1999.

6. Observation relating to monthly balances of accounts

Concerning monthly balances of accounts, the Agency fully sup-
ports the Court of Auditors(cid:146) observation, which will be imple-
mented through the establishment of procedures and appropri-
ate measures during the financial year 1999.

These last payments will be covered by appropriations commit-
ted under the budget for 1999.

8. The Agency will endeavour in the future to no longer carry
over appropriations under the conditions indicated by the Court.

VAT

9. The Agency, following the advice of the Spanish tax office, is
in the process of launching procedures to recover VAT directly
from suppliers. The first reimbursements are expected before the
end of the year.

Calls for tender/Advisory Committee on Procurements and
Contracts (ACPC)

10. The Agency will follow the Court(cid:146)s recommendations on this
matter by setting deadlines for submitting tenders of at least 40
days to enable all tenders to be submitted to the ACPC for its
opinion.

Implementation of the budget/Principle of annuality

Premises

7. The cancellations relate to appropriations earmarked for mea-
sures which have been cancelled in full agreement with the con-
tracting parties, for whom every obligation was met. Other can-
cellations concern appropriations committed to cover the last
payment of the contracts with the focal points which had not
been paid due to the delay in the implementation of the projects.

11. The tenancy agreement is subject to Spanish legislation and
local customs, which make provision for the constitution of a
bank guarantee. To follow up the Court(cid:146)s recommendation, the
Agency will raise the subject of this tenancy requirement at the
negotiations to renew the lease at the end of the year 2000.